Client Business Liechtenstein
Segment results |
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in CHF 1,000 | 2019 | 2018 | Variance | Variance |
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Total net interest income1 | 66,111 | 78,876 | –12,765 | –16.2 |
Total net income from commission | 86,751 | 91,261 | –4,510 | –4.9 |
Income from trading activities | 16,840 | 18,734 | –1,894 | –10.1 |
Income from financial instruments | 0 | 0 | 0 | 0.0 |
Other income | 300 | 100 | 200 | 200.0 |
Total operating income | 170,002 | 188,971 | –18,969 | –10.0 |
Personnel expenses | 34,006 | 34,383 | –377 | –1.1 |
General and administrative expenses | 3,895 | 4,538 | –643 | –14.2 |
Depreciation of property, equipment and intangible assets | 4,945 | 4,838 | 107 | 2.2 |
Credit loss expenses | –603 | –2,992 | 2,389 | 79.8 |
Provisions and losses | 309 | 134 | 175 | 130.6 |
Services to/from other segments | 43,258 | 41,888 | 1,370 | 3.3 |
Operating expenses | 85,810 | 82,789 | 3,021 | 3.6 |
Segment income before income tax | 84,192 | 106,182 | –21,990 | –20.7 |
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Additional information |
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Operating expenses excluding depreciation and amortisation, valuation | 47.7 | 42.8 |
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Operating expenses excluding valuation allowances, provisions and losses / | 50.6 | 45.3 |
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Client assets under management (in CHF billion) | 26.9 | 25.0 |
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Change in client assets under management | 7.4 | –6.3 |
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Net new money (in CHF billion) | –0.6 | –0.2 |
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Total operating income / average client assets under management (bp)2 | 65.5 | 73.0 |
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Segment result / average client assets under management (bp)2 | 32.4 | 41.0 |
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Cost/income ratio operating income (in %)3 | 47.8 | 42.8 | 5.0 | 11.8 |
Headcount (number of employees) | 195 | 197 | –1.5 | –0.8 |
Headcount (expressed as full-time equivalents) | 179.5 | 183.3 | –3.8 | –2.0 |
- As of 1 January 2019, the new funds transfer pricing was introduced within the Group. The impact of this change for the segment Client Business Liechtenstein amounted to CHF -10.1 million. The prior-year comparatives were not restated as the change for prior periods was impracticable because of the passage of time as well as the lack of an appropriate data base and the cost of assembling this data retrospectively on an individual-transaction basis would be so high that it would bear no relationship to the benefit to be derived therefrom.
- 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 Liechtenstein” encompasses the international private banking business and the business with intermediaries conducted in Liechtenstein as well as the local universal banking and credit-granting businesses. It includes the units of VP Bank Ltd, Vaduz which are in direct client contact. In addition, the CIO Office, Group Investment Management, Group Investment Advisory, Group Product Center, Group Sustainability and VP Fund Solutions (Liechtenstein) AG are allocated to this business segment.
Segment result
The pre-tax segment result fell from CHF 106.2 million to CHF 84.2 million (CHF –22.0 million) compared to the same period last year. In 2019, operating income year-on-year declined by CHF 19.0 million (10.0 per cent). This decline results, on the one hand, from income from interest business with clients (–16.2 per cent) and on the other, from commission and service income (–4.9 per cent). The introduction of fund-transfer pricing as of 1 January 2019, which reduced the result by CHF 10.1 million compared with the prior-year period, was the main reason for this decrease in the interest income. The declining level of client transactions on stock exchanges had a negative impact on commission and trading income.
Operating expenses rose by CHF 3.0 million (3.6 per cent) to CHF 85.8 million (prior year: CHF 82.8 million). This increase results primarily from the caption valuation allowances, provisions and losses. In 2019, this position increased, year-on-year, as a result of the release of no longer required valuation allowances.
Intersegmental recharges in the business segment Client Business Liechtenstein are based upon fixed internal transfer prices. Indirect costs for internal services are reported in the business segment in the caption “services to/from other segment(s)”.
The gross margin amounted to 65.5 basis points (prior-year period: 73.0 basis points). A portion of this decline results from the introduction of fund-transfer pricing as of 1 January 2019. The cost/income ratio improved from 42.8 per cent to 47.8 per cent.
During the financial year, the segment recorded a net outflow of client money of CHF 0.6 billion which can be explained principally by the loss of one large client.
Assets under management at 31 December 2019 totalled CHF 26.9 billion (31 December 2018: CHF 25.0 billion). The employee headcount declined from 183 (31 December 2018) to 180 positions.