Segment reporting
Segment reporting
01.01.–30.06.2015 (audited) |
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in CHF 1,000 | Client | Client | Corporate Center | Total Group |
Net interest income | 25,159 | 10,569 | 5,884 | 41,612 |
Net income from commission business and services | 45,877 | 22,415 | –2,354 | 65,938 |
Net income from trading activities | 10,001 | 3,657 | 6,111 | 19,769 |
Income from financial instruments | 9 | 232 | –5,946 | –5,705 |
Other income1 | 0 | 114 | 50,788 | 50,902 |
Total net operating income | 81,046 | 36,987 | 54,483 | 172,516 |
Personnel expenses | 17,335 | 18,648 | 31,248 | 67,231 |
General and administrative expenses | 1,413 | 10,324 | 17,811 | 29,548 |
Services to/from other segments | 23,149 | 0 | –23,149 | 0 |
Operating expenses | 41,897 | 28,972 | 25,910 | 96,779 |
Gross income | 39,149 | 8,015 | 28,573 | 75,737 |
Depreciation and amortisation | 1,835 | 2,245 | 14,980 | 19,060 |
Valuation allowances, provisions and losses | 152 | 4,660 | 12,592 | 17,404 |
Income before income tax | 37,162 | 1,110 | 1,001 | 39,273 |
Taxes on income |
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| –1,667 |
Group net income |
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| 40,940 |
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Segment assets (in CHF million) | 4,698 | 3,116 | 4,809 | 12,623 |
Segment liabilities (in CHF million) | 8,139 | 2,841 | 721 | 11,701 |
Client assets under management (in CHF billion)2,3 | 24.4 | 10.2 | 0.0 | 34.6 |
Net new money (in CHF billion)4 | 6.2 | 0.0 | 0.0 | 6.2 |
Headcount (number of employees) | 180 | 252 | 378 | 810 |
Headcount (expressed as full-time equivalents) | 171.1 | 240.0 | 334.9 | 746.0 |
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as of 31.12.2014 |
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Segment assets (in CHF million) | 3,448 | 3,243 | 4,514 | 11,205 |
Segment liabilities (in CHF million) | 6,656 | 2,951 | 729 | 10,336 |
Client assets under management (in CHF billion)2 | 19.5 | 11.4 | 0.0 | 30.9 |
Net new money (in CHF billion) | –0.2 | –0.6 | 0.0 | –0.8 |
Headcount (number of employees) | 157 | 259 | 339 | 755 |
Headcount (expressed as full-time equivalents) | 146.8 | 246.8 | 301.3 | 694.9 |
1 The non-recurring positive effect of the “bargain purchase” (badwill arising on acquisition) is disclosed in the Corporate Center. 2 Calculation in accordance with Table P of the Guidelines to the Liechtenstein Banking Ordinance issued by the Government of Liechtenstein (FL-BankO). 3 Included in this position are acquired client relationships (note 17) of CHF 6.7 billion. 4 Included in this position are acquired client relationships of CHF 6.7 billion.
The recharging of costs and revenues between the business units takes place on the basis of internal transfer prices, actual recharges or on prevailing market conditions. Recharged costs within the segments are subject to an annual review and, where necessary, are amended to reflect new economic conditions. | ||||
Structure
The organisational structure of VP Bank Group, which serves to underscore the focus on market needs, remains unchanged as of 30 June 2015. VP Bank Group consists of the three organisational units: “Chief Executive Officer”, “Client Business” and “Chief Financial Officer & Banking Services”.
For segment-reporting purposes, the organisational unit “Client Business” is divided into the two business segments: “Client Business Liechtenstein” and “Client Business International”, as previously. The organisational units “Chief Executive Officer” and “Chief Financial Officer & Banking Services” are regrouped together under the business segment “Corporate Center” within segment reporting.
The merger with Centrum Bank, Vaduz, is reflected in the segment reporting for the first half year of 2015. The non-recurring positive effect of the “bargain purchase” (gain arising from the acquisition of Centrum Bank) as well as restructuring costs (including the costs of the social plan) and project costs are reflected in the business segment “Corporate Center”. The client assets transferred as well as client revenues from this integration are reported in the business segment “Client Business Liechtenstein”. Amortisation of transferred capitalised client assets is also allocated to this business segment. Employment contracts of the employees of Centrum Bank, Vaduz, were transferred to VP Bank and integrated into the existing organisational structure of VP Bank Group. As a result of this allocation, ordinary costs were charged to the respective business segment (Client Business Liechtenstein and Corporate Center, respectively).
Prior-year amounts are stated without Centrum Bank, Vaduz.
01.01.–30.06.2014 (unaudited) |
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in CHF 1,000 | Client | Client | Corporate Center | Total Group |
Net interest income | 18,215 | 9,938 | 3,357 | 31,510 |
Net income from commission business and services | 36,808 | 25,270 | –2,025 | 60,053 |
Net income from trading activities | 6,697 | 3,387 | 1,553 | 11,637 |
Income from financial instruments | 9 | 827 | 6,036 | 6,872 |
Other income | 0 | 145 | 328 | 473 |
Total net operating income | 61,729 | 39,567 | 9,249 | 110,545 |
Personnel expenses | 14,243 | 22,028 | 25,379 | 61,650 |
General and administrative expenses | 1,029 | 10,307 | 11,496 | 22,832 |
Services to/from other segments | 17,421 | 0 | –17,421 | 0 |
Operating expenses | 32,693 | 32,335 | 19,454 | 84,482 |
Gross income | 29,036 | 7,232 | –10,205 | 26,063 |
Depreciation and amortisation | 133 | 2,280 | 12,298 | 14,711 |
Valuation allowances, provisions and losses | 1,977 | –948 | –684 | 345 |
Income/loss before income tax | 26,926 | 5,900 | –21,819 | 11,007 |
Taxes on income |
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| –126 |
Group net income |
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| 11,133 |
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Segment assets (in CHF million) | 3,403 | 3,246 | 4,593 | 11,243 |
Segment liabilities (in CHF million) | 6,593 | 3,005 | 775 | 10,373 |
Client assets under management (in CHF billion)1 | 19.4 | 11.8 | 0.0 | 31.2 |
Net new money (in CHF billion) | 0.1 | 0.1 | 0.0 | 0.2 |
Headcount (number of employees) | 161 | 268 | 327 | 756 |
Headcount (expressed as full-time equivalents) | 151.8 | 256.5 | 288.4 | 696.7 |
1 Calculation in accordance with Table P of the Guidelines to the Liechtenstein Banking Ordinance issued by the Government of Liechtenstein (FL-BankO).
The recharging of costs and revenues between the business units takes place on the basis of internal transfer prices, actual recharges or prevailing | ||||
Client Business Liechtenstein
Segment results |
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in CHF 1,000 | 01.01.–30.06.2015 audited | 01.01.–30.06.2014 unaudited | Variance absolute | Variance in % |
Net interest income | 25,159 | 18,215 | 6,944 | 38.1 |
Net income from commission business and services | 45,877 | 36,808 | 9,069 | 24.6 |
Net income from trading activities | 10,001 | 6,697 | 3,304 | 49.3 |
Income from financial instruments | 9 | 9 | 0 | 0.0 |
Other income | 0 | 0 | 0 | 0.0 |
Total net operating income | 81,046 | 61,729 | 19,317 | 31.3 |
Personnel expenses | 17,335 | 14,243 | 3,092 | 21.7 |
General and administrative expenses | 1,413 | 1,029 | 384 | 37.3 |
Services to/from other segments | 23,149 | 17,421 | 5,728 | 32.9 |
Operating expenses | 41,897 | 32,693 | 9,204 | 28.2 |
Gross income | 39,149 | 29,036 | 10,113 | 34.8 |
Depreciation and amortisation | 1,835 | 133 | 1,702 | n.a. |
Valuation allowances, provisions and losses | 152 | 1,977 | –1,825 | –92.3 |
Segment income before income tax | 37,162 | 26,926 | 10,236 | 38.0 |
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Additional information |
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Operating expenses excluding depreciation and amortisation / | 51.7 | 53.0 |
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Operating expenses including depreciation and amortisation / | 54.0 | 53.2 |
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Client assets under management (in CHF billion) | 24.4 | 19.4 |
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Change in client assets under management | 25.0 | 2.9 |
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Net new money (in CHF billion) | 6.2 | 0.1 |
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Gross income / average client assets under management (bp)1 | 73.8 | 64.4 |
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Segment result / average client assets under management (bp)1 | 33.9 | 28.1 |
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Cost/income ratio operating income (in %)2 | 51.7 | 53.0 | –1.3 | –2.4 |
Headcount (number of employees) | 180 | 161 | 19.0 | 11.8 |
Headcount (expressed as full-time equivalents) | 171.1 | 151.8 | 19.3 | 12.7 |
1 Annualised, average values. 2 Operating expenses / gross income less other income and income from financial instruments. | ||||
Structure
The business segment “Client Business Liechtenstein” encompasses international private banking and the business with intermediaries located 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, Group Investment, Product & Market Management and the IFOS Internationale Fonds Service Aktiengesellschaft are allocated to this business segment. As from 2015, this business segment includes the employees transferred and client business taken over from the integration of Centrum Bank AG, Vaduz, of the aforementioned units.
Segment results
The pre-tax segment results of the first six months of 2015 increased by CHF 10.2 million (38.0 per cent) over the comparable prior-year period, primarily as a result of the integration of Centrum Bank. In the first half year of 2015, total operating revenues increased by CHF 19.3 million (31.3 per cent) period on period. This growth is to be ascribed, inter alia, to the higher business volume resulting from the transfer of client assets under management arising from the merger with Centrum Bank, which positively impacted client-related interest income (+38.1 per cent), income from commissions and service income (+24.6 per cent) as well as trading income (+49.3 per cent). The existing client-related business in Client Business Liechtenstein also contributed to this positive result. Operating expenses rose by CHF 9.2 million (28.2 per cent) to CHF 41.9 million (prior-year period: CHF 32.7 million), resulting from the merger with Centrum Bank and the related transfer of employees. In the business segment Client Business Liechtenstein, intersegment recharges are based upon fixed internal transfer prices. Indirect costs for internal services provided are reported in the business segment under “Services to/from other segments”. The higher level of recharges from other segments results from the merger with Centrum Bank. The increase in depreciation and amortisation is a result of amortisation of intangible assets related to client assets transferred as part of the merger. Charges for valuation allowances, provisions and losses in the first six months of 2015 declined period on period by CHF 1.8 million to CHF 0.2 million (prior-year comparable period: CHF 2.0 million). The gross margin improved to 73.8 basis points (prior-year period: 64.4 basis points), primarily as a result of client assets transferred as part of the merger. The cost/income ratio was 51.7 per cent and was thus lower than the prior-period comparative value of 53.0 per cent.
During the reporting period, there was a net increase in client assets under management totalling CHF 6.2 billion, of which CHF 6.7 billion resulted from the merger with Centrum Bank. Client assets under management at 30 June 2015 totalled CHF 24.4 billion (31 December 2014: CHF 19.5 billion). The personnel headcount increased from 147 positions (31 December 2014) to 171 positions, principally as a result of the successful transfer of employees as part of the merger with Centrum Bank. Compared with 30 June 2014, there was an increase of 19 positions resulting from the merger.
Client Business International
Segment results |
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in CHF 1,000 | 01.01.–30.06.2015 audited | 01.01.–30.06.2014 unaudited | Variance absolute | Variance in % |
Net interest income | 10,569 | 9,938 | 631 | 6.3 |
Net income from commission business and services | 22,415 | 25,270 | –2,855 | –11.3 |
Net income from trading activities | 3,657 | 3,387 | 270 | 8.0 |
Income from financial instruments | 232 | 827 | –595 | –71.9 |
Other income | 114 | 145 | –31 | –21.4 |
Total net operating income | 36,987 | 39,567 | –2,580 | –6.5 |
Personnel expenses | 18,648 | 22,028 | –3,380 | –15.3 |
General and administrative expenses | 10,324 | 10,307 | 17 | 0.2 |
Services to/from other segments | 0 | 0 | 0 | 0.0 |
Operating expenses | 28,972 | 32,335 | –3,363 | –10.4 |
Gross income | 8,015 | 7,232 | 783 | 10.8 |
Depreciation and amortisation | 2,245 | 2,280 | –35 | –1.5 |
Valuation allowances, provisions and losses | 4,660 | –948 | 5,608 | n.a. |
Segment income before income tax | 1,110 | 5,900 | –4,790 | –81.2 |
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Additional information |
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Operating expenses excluding depreciation and amortisation / | 78.3 | 81.7 |
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Operating expenses including depreciation and amortisation / | 84.4 | 87.5 |
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Client assets under management (in CHF billion) | 10.2 | 11.8 |
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Change in client assets under management | –10.8 | 2.4 |
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Net new money (in CHF billion) | 0.0 | 0.1 |
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Gross income / average client assets under management (bp)1 | 68.5 | 68.1 |
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Segment result / average client assets under management (bp)1 | 2.1 | 10.2 |
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Cost/income ratio operating income (in %)2 | 79.1 | 83.8 | –4.7 | –5.6 |
Headcount (number of employees) | 252 | 268 | –16.0 | –6.0 |
Headcount (expressed as full-time equivalents) | 240.0 | 256.5 | –16.5 | –6.4 |
1 Annualised, average values. 2 Operating expenses / gross income less other income and income from financial instruments. | ||||
Structure
The business segment Client Business International encompasses the private banking business in international locations. VP Bank (Switzerland) Ltd, VP Bank (Luxembourg) SA, VP Bank (BVI) Ltd, VP Bank (Singapore) Ltd, VP Wealth Management (Hong Kong) Ltd and VPB Finance S.A. are allocated to this business segment.
Segment results
The strong Swiss franc and the uncertainties on markets impacted our international private banking business. Compared with the 2014 semi-annual results, pre-tax results declined by CHF 4.8 million in the first six months of 2015. Total operating income fell by 6.5 per cent from CHF 39.6 million to CHF 37.0 million, in particular as a result of the downward trend in commission and service income and in part as a result of the strong Swiss franc as well as the gains on financial investments. Interest income and trading income developed positively; period on period, they increased by CHF 0.6 million and CHF 0.3 million, respectively. Operating expenses could be reduced by CHF 3.4 million or 10.4 per cent to CHF 29.0 million. This decline is a result of personnel expenses, which fell by CHF 3.4 million to CHF 18.6 million as a result of the streamlining of the organisational structure within Client Business International. In the business segment “Client Business International”, the recharging of services is based on actual invoices and record- ed under general and administrative expenses. The charges for valuation allowances, provisions and losses showed an increase of CHF 5.6 million to CHF 4.7 million.
The gross margin was improved to 68.5 basis points (prior-year period: 68.1 basis points). The cost/income ratio improved from 83.8 per cent to 79.1 per cent.
The development of client assets was neutral in the first six months of 2015. These net inflows and outflows of client assets must also be viewed against the backdrop of the regulatory environment and tax-related issues triggering outflows of client assets. In Asian markets, welcome net inflows of new client assets were achieved. Client assets under management at 30 June 2015 amounted to CHF 10.2 billion (31 December 2014: CHF 11.4 billion). The employee headcount of 240 positions was reduced by 17 positions compared with 30 June 2014 and by 7 positions compared with the end of 2014.
Corporate Center
Segment results |
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in CHF 1,000 | 01.01.–30.06.2015 audited | 01.01.–30.06.2014 unaudited | Variance absolute | Variance in % |
Net interest income | 5,884 | 3,357 | 2,527 | 75.3 |
Net income from commission business and services | –2,354 | –2,025 | –329 | –16.2 |
Net income from trading activities | 6,111 | 1,553 | 4,558 | 293.5 |
Income from financial instruments | –5,946 | 6,036 | –11,982 | –198.5 |
Other income | 50,788 | 328 | 50,460 | n.a. |
Total net operating income | 54,483 | 9,249 | 45,234 | 489.1 |
Personnel expenses | 31,248 | 25,379 | 5,869 | 23.1 |
General and administrative expenses | 17,811 | 11,496 | 6,315 | 54.9 |
Services to/from other segments | –23,149 | –17,421 | –5,728 | –32.9 |
Operating expenses | 25,910 | 19,454 | 6,456 | 33.2 |
Gross income | 28,573 | –10,205 | 38,778 | n.a. |
Depreciation and amortisation | 14,980 | 12,298 | 2,682 | 21.8 |
Valuation allowances, provisions and losses | 12,592 | –684 | 13,276 | n.a. |
Segment income before income tax | 1,001 | –21,819 | 22,820 | n.a. |
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Additional information |
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Headcount (number of employees) | 378 | 327 | 51.0 | 15.6 |
Headcount (expressed as full-time equivalents) | 334.9 | 288.4 | 46.5 | 16.1 |
Structure
The business segment “Corporate Center” is responsible for banking operations and the processing of business transactions. It encompasses the areas Group Operations, Group Information Technology, Group Finance & Risk, Group Treasury & Execution, Group Legal, Compliance & Tax, Group Human Resources Management, Group Communications & Marketing and Group Business Development. In addition, those revenues and expenses having no direct relationship to the 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 non-recurring positive effect of the “bargain purchase” from the merger with Centrum Bank Vaduz (gain from the acquisition of Centrum Bank) as well as expenditures of restructuring (including social plan) and project costs are reflected in the business segment “Corporate Center”.
From 2015 onwards, this business segment includes the employees of the aforementioned units transferred in connection with the integration of Centrum Bank.
Segment results
The pre-tax segment results for the first six months of 2015 amounted to CHF 1.0 million compared to minus CHF 21.8 million in the prior-year period.
Total operating income in the first six months of 2015 increased period on period by CHF 45.2 million. The principal reason for this is other gains and losses, which rose to CHF 50.8 million, principally as a result of the “bargain purchase” of CHF 50.0 million from the merger.
Interest income improved on the one hand as a result of revaluation gains from interest-rate hedging transactions. On the other hand, as a result of the partially negative interest-rate level, interest income from maturity transformation fell during the reporting period.
Income from commissions and services reflect a decline in income. This decline includes third-party bank commissions which are invoiced to front business units by the service units through internal recharging.
Trading income includes the receipts of Group Treasury & Execution, inter alia. This relates to income generated from the execution of client trades. This caption also includes the results of derivatives employed to minimise risks as well as gains/losses from balance-sheet management activities.
The discontinuation by the Swiss National Bank of the minimum exchange rate versus the euro on 15 January 2015 impacted financial instruments. Gains on financial investments in the first six months of 2015 amounted to minus CHF 5.9 million. Interest and dividend income increased as a result of the higher investment volumes. These additional receipts were not able to offset the revaluation losses as a result of foreign-currency movements and decline in prices. In the prior-year period, this caption disclosed a gain of CHF 6.0 million.
The “bargain purchase” gain arising from the acquisition of Centrum Bank was taken to income in the position “Other income”.
Operating expenses of the reporting period rose by CHF 6.4 million from CHF 19.5 million to CHF 25.9 million. The reason for this is the project costs relating to the integration of Centrum Bank, Vaduz, on the one hand. On the other hand, employees were transferred as a result of this merger, and accordingly there were CHF 23.1 million more internal recharges for services provided than in the comparable prior-year period of 2014 (CHF 17.4 million). Depreciation and amortisation increased by CHF 2.7 million to CHF 15.0 million as a result of the merger.
During the current period, charges for valuation allowances, provisions and losses showed an increase of CHF 13.3 million to CHF 12.6 million. Included therein are reorganisation provisions in connection with the merger of Centrum Bank, Vaduz. The employee headcount rose from 288 (30 June 2014) to 335 positions, principally as a result of the merger. Compared to the end of 2014, the employee headcount changed by 34 positions.