Client Business International

in CHF 1,000	2018	2017	Variance absolute	Variance in %
Segment results
Total net interest income	39,340	29,978	9,362	31.2
Total net income from commission business and services	39,015	37,131	1,884	5.1
Income from trading activities	8,968	8,361	607	7.3
Income from financial instruments	86	78	8	10.3
Other income	2,490	2,527	–37	–1.5
Total operating income	89,899	78,075	11,824	15.1
Personnel expenses	54,313	41,361	12,952	31.3
General and administrative expenses	30,555	22,329	8,226	36.8
Depreciation of property, equipment and intangible assets	3,311	3,163	148	4.7
Valuation allowances, provisions and losses	–11,062	4,074	–15,136	–371.5
Services to/from other segments	0	0	0	0.0
Operating expenses	77,117	70,927	6,190	8.7
Segment income before income tax	12,782	7,148	5,634	78.8

Additional information
Operating expenses excluding depreciation and amortisation, valuation allowances, provisions and losses / total operating income (in %)	94.4	81.6
Operating expenses excluding valuation allowances, provisions and losses / total operating income (in %)	98.1	85.6
Client assets under management (in CHF billion)	16.5	13.7
Change in client assets under management compared to 31.12. prior year (in %)	20.7	22.3
Net new money (in CHF billion)	3.4	1.5
Total operating income / average client assets under management (bp)1	59.6	62.9
Segment result / average client assets under management (bp)1	8.5	5.8
Cost/income ratio operating income (in %)2	97.2	84.4	12.8	15.2
Headcount (number of employees)	330	279	50.5	18.1
Headcount (expressed as full-time equivalents)	313.3	262.2	51.1	19.5

Annualised, average values.
Operating expenses excluding depreciation and amortisation, valuation allowances, provisions and losses / gross income less other income and income from financial instruments.

Structure

The business segment “Client Business International” encompasses the business conducted in international locations. VP Bank (Switzerland) Ltd, VP Bank (Luxembourg) SA, VP Bank (BVI) Ltd, VP Bank Ltd Singapore Branch, VP Wealth Management (Hong Kong) Ltd and VP Fund Solutions (Luxembourg) SA are allocated to this business segment.

Segment result

In 2018, the pre-tax segment result could be improved, year-on-year, by CHF 5.6 million. Operating income could be increased, year-on-year, by CHF 11.8 million (15.1 per cent). This increase is attributable mainly to higher interest income from clients (31.2 per cent), but also commission and service income (5.1 per cent) as well as trading income (7.3 per cent) contributed to this positive result. Commission and service income shows a positive development thanks to the recruitment offensive. Operating expenses rose by CHF 6.2 million, or 8.7 per cent, to CHF 77.1 million. This increase results, on the one hand, from personnel and general and administrative expense reflecting principally the recruitment offensive for new senior client advisors. On the other hand, charges for valuation allowances, provisions and losses ended with a result of minus CHF 11.1 million. In the business segment “Client Business International”, the recharging of services is based on actual invoices and recorded under general and administrative expenses. In 2018, intersegmental recharges increased by CHF 5.0 million.

The gross margin fell to 59.6 basis points (prior year: 62.9 basis points). The cost/income ratio increased from 84.4 per cent to 97.2 per cent.

Net new money from clients developed extremely positively in 2018 with CHF 3.4 billion. On the one hand, the recruitment offensive continued to show net new money inflows in 2018 in all locations. On the other hand, net new money from clients could again be achieved in the investment-fund business, inter alia, with the acquisition of the Luxembourg-based Carnegie Investment Fund (CHF 1.4 billion) as well as on European markets as a result of intensive market-development activities. Assets under management at 31 December 2018 aggregated CHF 16.5 billion (31 December 2017: CHF 13.7 billion). The employee headcount rose from 262 individuals (31 December 2017) to 313, primarily because of the recruitment offensive for new senior client advisors.