Client Business Liechtenstein

in CHF 1,000
Segment results
Total net interest income1
Total net income from commission business and services
Income from trading activities
Income from financial instruments
Other income
Total operating income
Personnel expenses
General and administrative expenses
Depreciation of property, equipment and intangible assets
Credit loss expenses
Provisions and losses
Services to/from other segments
Operating expenses
Segment income before income tax

Additional information
Operating expenses excluding depreciation and amortisation, valuation allowances, provisions and losses / total operating income (in %)
Operating expenses excluding valuation allowances, provisions and losses / total operating income (in %)
Client assets under management (in CHF billion)
Change in client assets under management compared to 31.12. prior year (in %)
Net new money (in CHF billion)
Total operating income / average client assets under management (bp)2
Segment result / average client assets under management (bp)2
Cost/income ratio operating income (in %)3
Headcount (number of employees)
Headcount (expressed as full-time equivalents)

in CHF 1,000	2019	2018	Variance absolute	Variance in %
Segment results
Total net interest income1	66,111	78,876	–12,765	–16.2
Total net income from commission business and services	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

Additional information
Operating expenses excluding depreciation and amortisation, valuation allowances, provisions and losses / total operating income (in %)	47.7	42.8
Operating expenses excluding valuation allowances, provisions and losses / total operating income (in %)	50.6	45.3
Client assets under management (in CHF billion)	26.9	25.0
Change in client assets under management compared to 31.12. prior year (in %)	7.4	–6.3
Net new money (in CHF billion)	–0.6	–0.2
Total operating income / average client assets under management (bp)2	65.5	73.0
Segment result / average client assets under management (bp)2	32.4	41.0
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

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1
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.
2
Annualised, average values.
3
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.