Corporate Center
Segment results |
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in CHF 1,000 | 2017 | 2016 | Variance | Variance |
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Total net interest income | 230 | 9,827 | –9,597 | –97.7 |
Total net income from commission | –3,867 | –5,265 | 1,398 | 26.6 |
Income from trading activities | 21,824 | 17,664 | 4,160 | 23.6 |
Income from financial instruments | 19,132 | 7,240 | 11,892 | 164.3 |
Other income | –198 | –1,149 | 951 | 82.8 |
Total operating income | 37,121 | 28,317 | 8,804 | 31.1 |
Personnel expenses | 58,213 | 62,561 | –4,348 | –7.0 |
General and administrative expenses | 31,725 | 26,839 | 4,886 | 18.2 |
Depreciation of property, equipment and intangible assets | 16,971 | 15,393 | 1,578 | 10.3 |
Valuation allowances, provisions and losses | 10,534 | –218 | 10,752 | n.a. |
Services to/from other segments | –39,689 | –40,389 | 700 | 1.7 |
Operating expenses | 77,754 | 64,186 | 13,568 | 21.1 |
Segment income before income tax | –40,633 | –35,869 | –4,764 | –13.3 |
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Additional information |
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Headcount (number of employees) | 387 | 371 | 16.0 | 4.3 |
Headcount (expressed as full-time equivalents) | 353.9 | 331.0 | 23.0 | 6.9 |
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, Group Business Development and Group Strategy. In addition, those revenues and expenses of VP Bank Ltd having no direct relationship to client-oriented business segments, 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 hedges are reported in this segment. Also, the effect of lowering the rate of conversion (IAS 19) flowed into the results of this segment.
Segment result
The pre-tax segment result in 2017 amounted to minus CHF 40.6 million as opposed to minus CHF 35.9 million in the prior year.
Year-on-year, operating income could be increased by CHF 8.8 million. Responsible for this is the increase is largely the income from financial investments.
Interest income declined, year-on-year by CHF 9.6 million. This is attributable, in part, to the on-going negative interest level and, consequently, to the decline in interest revenues from maturity transformation (SNB negative interest).
Commission and service income reports a fall 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 foreign-exchange trades. The caption also includes the results of derivatives employed to minimize risks as well as gains/losses from balance-sheet management activities.
In 2017, income from financial investments amounted to CHF 19.1 million. This gratifying improvement of CHF 11.9 million resulted primarily from unrealised revaluation gains on financial instruments.
Operating expenses in the financial year rose by CHF 13.6 million from CHF 64.2 million to CHF 77.8 million. The reason for this is the provision established for a payment to the German authorities based upon a settlement reached with them. The settlement encompasses VP Bank Ltd and all of its subsidiary companies and is reported in full in the Corporate Center. Consequently, charges for valuation allowances, provisions and losses in the reporting period increased by CHF 10.8 million. Personnel expense was credited with an amount of CHF 10.1 million relating to the adjustment to the rate of conversion in the pension fund (IAS 19). General and administrative expense grew by CHF 4.9 million, inter alia, because of costs incurred in connection with growth initiatives as well as brand renewal costs. Depreciation and amortisation increased from CHF 15.4 million to CHF 17.0 million.
The employee headcount rose from 331 (31 December 2016) to 354 positions.