Corporate Center
Segment results
in CHF 1,000 | 2016 | 2015 | Variance | Variance |
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Total net interest income1 | 9,827 | 16,328 | –6,501 | –39.8 |
Total net income from commission | –5,265 | –4,330 | –935 | –21.6 |
Income from trading activities1 | 17,664 | 8,527 | 9,137 | 107.2 |
Income from financial instruments | 7,240 | 139 | 7,101 | n.a. |
Other income | –1,149 | 49,394 | –50,543 | –102.3 |
Total operating income | 28,317 | 70,058 | –41,741 | –59.6 |
Personnel expenses | 62,561 | 52,563 | 9,998 | 19.0 |
General and administrative expenses | 26,839 | 38,212 | –11,373 | –29.8 |
Depreciation and amortisation | 15,393 | 30,126 | –14,733 | –48.9 |
Valuation allowances, provisions and losses | –218 | 11,350 | –11,568 | –101.9 |
Services to/from other segments | –40,389 | –47,691 | 7,302 | 15.3 |
Operating expenses | 64,186 | 84,560 | –20,374 | –24.1 |
Segment income before income tax | –35,869 | –14,502 | –21,367 | –147.3 |
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Additional information |
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Headcount (number of employees) | 371 | 382 | –11.0 | –2.9 |
Headcount (expressed as full-time equivalents) | 331.0 | 339.5 | –8.6 | –2.5 |
Structure
The business segment “Corporate Center” is of great importance for banking operations and the processing of business transactions. It encompasses the areas Group Operations, Group Information Technology, Group Credit, Group Treasury & Execution, Group Finance, Group Risk, Group Legal, Compliance & Tax, Group Human Resources Management, Group Communications & Marketing and Group Business Development. In addition, those revenues and expenses of VP Bank Ltd having no direct relationship to client-oriented operating divisions, as well as consolidation adjustments are reported under the Corporate Center. Revenue-generating business activities of the segment Corporate Center arise in connection with the Group Treasury Function. The results of the Group's own financial investments, the structural contribution and the changes in the value of interest-rate hedges are reported in this segment. The prior-year’s non-recurring positive effect of the “bargain purchase” arising from the merger with Centrum Bank (gain from the acquisition of Centrum Bank) as well as the charges for restructuring costs (including social plan) and project costs are reported in the Corporate Center business segment.
Segment result
The pre-tax segment result in 2016 amounted to minus CHF 35.9 million as opposed to minus CHF 14.5 million in the prior year. Year-on-year, operating income fell by CHF 41.7 million. This is due to the non-recurring impact of the “bargain purchase”, which was recorded under “Other income” in the prior year. Interest income declined, year-on-year, by CHF 6.5 million. This, in part, is attributable to the negative interest level and, as a consequence, to the decline in interest revenues from maturity transformation (SNB negative interest). Commission and service income reports a drop in revenues. This comprises third-party bank commissions which were invoiced to front business units by the service units through internal recharging.
Income received by Group Treasury & Execution is reported under trading income. This relates to income generated from the execution of client trades. The caption also includes the results of derivatives employed to minimize risks as well as gains/losses from balance-sheet management activities. In 2016, income from financial investments amounted to 2016 CHF 7.2 million. This improvement of CHF 7.1 million is to be mainly attributed to the non-recurring prior year’s impact of the decision by the SNB to discontinue the minimum exchange rate of the Euro to the Swiss franc and which gave rise to revaluation losses. Interest and dividend income show a slight decline. The gain arising on the acquisition of Centrum Bank (“bargain purchase”) was taken to income in the prior year under the caption “Other income”.
Operating expenses in the financial year could be reduced by CHF 20.4 million from CHF 84.6 million to CHF 64.2 million. On the one hand, this is the result of synergy effects in personnel and general and administrative expenses. On the other hand, no integration costs were incurred during the reporting period. The increase in personnel costs results above all from the prior-year’s change in the conversion rate of the pension fund (IAS 19) amounting to CHF 8.5 million; this non-recurring amount was credited to expenses in 2015. Depreciation and amortisation fell by CHF 14.7 million to CHF 15.4 million. The reason for this decline was the fact that no amortisation was charged any longer on the Avaloq banking platform as well as one-off merger-related write-downs. Charges for valuation allowances, provisions and losses in the reporting period were CHF 11.6 million lower as a result of the merger. Because of the lower level of operating expenses in the Corporate Center of CHF 40.4 million, there were less inter-segmental recharges than in the 2015 prior-year (CHF 47.7 million).
Basically because of the synergy effects from the merger, employee headcount could be reduced from 340 (31 December 2015) to 331 positions.