LLB Group increases net profit by 8.1 percent to CHF 95.3 million
Vaduz, 27 August 2009. Net profit of the LLB Group was above the results attained in the first and second halves of 2008. The stabilisation of the financial markets led to an increase in client assets under management and to a significantly improved performance with financial investments.
- Client assets under management rose by 3.3 percent to CHF 47.6 billion. Net new money outflow amounted to CHF 304 million.
- Largely due to the active reduction of risk in interbank business, net interest income decreased by 10.5 percent to CHF 106.3 million. Loans to customers declined by
1.2 percent to CHF 9.1 billion since the end of 2008, although mortgage loans expanded by CHF 216.5 million.
- Lower client assets, which on average were 18.4 percent below the previous year's figure, and the uncertainty among investors caused a contraction in net fee and commission income of 22.8 percent to CHF 109.6 million.
- The LLB Group has an extremely solid balance sheet structure and a very sound equity capital base. At 30 June 2009, the tier 1 ratio stood at 13.4 percent.
- The LLB Group is pushing ahead with its investment programme: the implementation of the "Avaloq" banking software, and the preparations for the opening of a bank in Vienna / Austria are progressing according to plan.
Key figures at a glance
| in CHF millions | First half 2009 | First half 2008 | Change in % |
| Operating income | 254.6 | 238.0 | 7.0 |
| Operating expenses | 149.5 | 139.5 | 7.1 |
| Net profit | 95.3 | 88.2 | 8.1 |
| Net new money inflow in % | –0.7 | 0.6 | n.a. |
| ROE in % | 11.8 | 11.0 | +0.8 pp |
| Earnings per share in CHF | 3.25 | 3.03 | 7.3 |
| Cost / income ratio in % | 58.7 | 58.6 | +0.1 pp |
 | 30 June 2009 | 31 December 2008 | Change in % |
| Tier 1 ratio in % | 13.4 | 13.5 | –0.1 pp |
| Assets under management in CHF billions | 47.6 | 46.1 | 3.3 |
| Total assets in CHF billions | 23.1 | 23.2 | –0.3 |
"We can be satisfied with the result for the first half year, it is within the scope of our expectations. The decline in net interest income is largely attributable to our cautious risk policy and, as expected, the lower level of client assets in comparison with the previous year affected our net fee and commission income. In contrast, the stabilisation of the financial markets boosted the performance of our financial investments. Our personnel and administrative expenses are under control, as documented by our stable cost / income ratio", commented Dr. Josef Fehr, Chairman of the Board of Management, in summarising the 2009 interim result.
Client assets grow to CHF 47.6 billion
Client assets increased by 3.3 percent to CHF 47.6 billion in comparison with the end of 2008 (CHF 46.1 billion). The growth was due to the good performance achieved on the financial markets. The LLB Group made good gains in particular with assets in own-managed funds (+7.8 % to CHF 3.3 billion) and assets with discretionary mandates (+6.3 % to CHF 8.1 billion). Other client assets stood at CHF 36.2 billion (+2.2 %). Both the Domestic Market Business Division and the Institutional Market Business Division were able to report net new money inflows. The uncertainty among investors as a result of the financial and economic crises, and the international taxation debate had an unfavourable impact on the International Market Business Division. In total, the net new money outflow amounted to CHF 304 million (–0.7 %).
Business environment weighs on operative earnings
The LLB Group's cautious risk policy, particularly in its important interbank business (increased liquidity and diversification), and the interest rate environment that was unfavourable for the LLB Group, led to a decline in net interest income of 10.5 percent to CHF 106.3 million. Lower client assets, which on average were 18.4 percent below the previous year's figure, caused a fall of 22.8 percent to CHF 109.6 million in net fee and commission income. Net trading income stood at CHF 17.7 million (+35.3 %). Revenues from client trading and the positive value changes with interest rate swaps also contributed to the positive result.
The performance of financial investments, which at the LLB is recognised directly in the profit and loss account, amounted to CHF 21.0 million (compared with CHF –46.6 million in the first half of 2008).
Stable cost structure – cost / income ratio 58.7 percent
Adjusted to consider part-timers, the LLB Group employed 1'024 persons as per 30 June 2009 (965 persons per 30 June 2008). Personnel expenses rose by 0.7 percent to CHF 87.9 million in comparison with the first half year of 2008, but proportionately lower to the increase in jobs (+6.1 %). In the first six months of 2009, general and office expenses increased by only 0.4 percent to CHF 39.5 million. In comparison with the second half of 2008, value adjustments normalised to CHF 8.5 million. Accordingly, in spite of the difficult economic situation, they are now only slightly over the multi-year median level. In total, operating expenses increased by 7.1 percent to CHF 149.5 million in comparison with the equivalent period in the previous year. The cost / income ratio remained stable at 58.7 percent (previous year: 58.6 %).
Net profit increased to CHF 95.3 million (previous year: CHF 88.2 million), corresponding to a rise of 8.1 percent. The return on equity attributable to the shareholders of LLB AG stood at
11.8 percent (previous year: 11.0 %).
Solid balance sheet structure and equity capital base – tier 1 ratio 13.4 percent
The balance sheet is very similar to that on 31 December 2008. The consolidated balance sheet total stood at CHF 23.1 billion (31 December 2008: CHF 23.2 billion).
The low level of interest rates induced clients to shift assets to some extent. On the liabilities side, balances due to customers climbed slightly from CHF 14.7 billion to CHF 15.0 billion. Whereas medium-term notes contracted from CHF 1.5 billion to CHF 1.3 billion, savings deposits increased from CHF 2.6 billion to CHF 3.2 billion. Mortgage loans were up by 3.1 percent to CHF 7.2 billion. In contrast, total loans to customers were down slightly from CHF 9.2 billion to CHF 9.1 billion. As a direct consequence of the LLB's stricter liquidity holding policy, balances due to banks fell from CHF 9.4 billion to CHF 8.7 billion, and cash and balances with central banks rose to CHF 1.1 billion.
Equity capital attributable to the shareholders of LLB AG stood at CHF 1.6 billion at 30 June 2009 (31 December 2008: CHF 1.6 billion). The tier 1 ratio was 13.4 percent (31 December 2008:
13.5 %).
Key figures of the business segments
| in CHF millions | Domestic Market
| International Market | Institutional Market | Corporate Center | Total |
| Total operating income | 74.5 | 64.9 | 55.1 | 60.1 | 254.6 |
| Total operating expenses | 53.0 | 49.7 | 17.0 | 29.8 | 149.5 |
| Business division profit before tax | 21.5 | 15.2 | 38.1 | 30.3 | 105.1 |
| Net new money inflow / outflow | 298 | –532 | 167 | –237 | –304 |
| Client assets | 11'910 | 15'779 | 16'239 | 3'681 | 47'609 |
| Employees (full-time equivalents) | 373 | 245 | 80 | 326 | 1'024 |
Outlook 2009
As regards the outlook for the second six months of 2009, Dr. Josef Fehr stated: "In view of the continuing difficult business environment, for the present we believe attaining of our medium-term growth objectives again in 2009 will be too ambitious, especially as regards the acquisition of new client assets. Our immediate priority is to implement our three-pillar strategy consistently, and to take full advantage of our operative strengths in terms of efficiency and client service. Assuming that the markets remain stable, we expect to achieve a business result above that of the previous year."
The preparations for the opening of a bank in Vienna / Austria are progressing according to plan. This bank will concentrate both on the attractive Austrian onshore market and on providing services for clients in Eastern Europe.
The preliminary work for the introduction of the new "Avaloq" banking software is running at top speed. "Avaloq" represents the largest IT project in the LLB Group's corporate history to date and is on course. Bank Linth will commence operations with the new version of the software on 1 January 2010. The parent company, Liechtensteinische Landesbank in Vaduz, and Liechtensteinische Landesbank (Switzerland) Ltd. will change over to "Avaloq" at the beginning of 2011. This will create the prerequisites to better exploit the synergies available within the LLB Group. Project "Shared Services" aims at identifying and evaluating the synergy potential offered by groupwide services during the next few months. This project should contribute to preserving the LLB Group's good cost structure and enhancing its competitiveness.
Detailed information on the 2009 interim result
The documents for the 2009 interim financial reporting of the LLB Group (presentation, 2009 interim report and media communiqué) will be available from 7.00 a. m. on 27 August 2009 at our website www.llb.li. We shall also provide the 2009 consolidated interim financial reporting in an interactive online version: German:
http://hb2009.llb.li and English:
http://hr2009.llb.li.
Conference call
The presentation of the interim business result will be made by Dr. Josef Fehr, Chairman of the Board of Management, and Siegbert Näscher, Head Group Finance & Risk, on
Thursday, 27 August 2009, at 10.30 a. m. Please use the following telephone number:
+41 91 610 56 00 to dial in to the conference.
A recording of the presentation can be heard from 12.00 a. m. to 12.00 midnight on this date on the telephone number: +41 91 612 43 30, Code 17213#.
Important dates
- Tuesday, 23 March 2010, presentation of the 2009 business result
- Friday, 7 May 2010, 18th ordinary Annual General Meeting 2010
Brief portrait
The Liechtensteinische Landesbank AG (LLB) is the longest established financial institute in the Principality of Liechtenstein. The Principality of Liechtenstein holds the majority of the company's share capital. The LLB's shares are listed on the SIX Swiss Exchange (symbol: LLB). The LLB Group offers its clients comprehensive wealth management services, as a universal bank, in private banking, asset management, fund services and trust services. With 1'024 employees, the LLB is represented in Liechtenstein, Switzerland, in the United Arab Emirates (Abu Dhabi and Dubai), on the Cayman Islands and in Hong Kong. As per 30 June 2009, the LLB Group managed client assets totalling CHF 47.6 billion. |
Contact
Liechtensteinische Landesbank AG
Dr. Cyrill Sele
Head Group Corporate Communications
Städtle 44
9490 Vaduz
Liechtenstein
Telephone +423 236 82 09
Fax +423 236 87 71
Internet www.llb.li
E-mail cyrill.sele@llb.li
