Segment reporting
Structure
VP Bank Group adjusted its organisational structure as of 1 July 2020, creating the new “Client Solutions” organisational unit. The external segment reporting reflects the organisational structure of VP Bank Group as of 30 June 2021 and the internal reporting to management. These form the basis for assessing the financial performance of the segments and the allocation of resources to the segments.
VP Bank Group consists of the six organisational units “Intermediaries & Private Banking”, “Client Solutions”, “Chief Executive Officer”, “Chief Financial Officer”, “Chief Operating Officer” and “Chief Risk Officer”.
The four organisational units “Chief Executive Officer”, “Chief Financial Officer”, “Chief Operating Officer” and “Chief Risk Officer” are regrouped together under the business unit “Corporate Center” for segment reporting.
Revenues and expenditures as well as assets and liabilities are allocated to the business units based on the responsibilities for the clients and the originator principle. Insofar as a direct allocation is not possible, the positions in question are reported under Corporate Center. Consolidation entries are also included under Corporate Center.
The previous year’s figures were aligned accordingly to ensure comparability.
01.01.–30.06.2021
in CHF 1,000 | Intermediaries & | Client | Corporate | Total |
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Total net interest income | 49,146 | 336 | 6,402 | 55,884 |
Total net income from commission | 66,760 | 14,947 | –3,703 | 78,003 |
Income from trading activities | 16,324 | 1,112 | 6,681 | 24,117 |
Income from financial instruments | 0 | 0 | 7,348 | 7,348 |
Other income | 765 | 123 | 344 | 1,232 |
Total operating income | 132,994 | 16,518 | 17,072 | 166,584 |
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Personnel expenses | 35,531 | 6,606 | 43,875 | 86,013 |
General and administrative expenses | 2,781 | 2,650 | 25,567 | 30,997 |
Depreciation of property, equipment and intangible assets | 1,321 | 260 | 13,951 | 15,532 |
Credit loss expenses | –520 | –6 | –7 | –533 |
Provisions and losses | 185 | 2 | 2 | 189 |
Services to/from other segments | 32,343 | 1,667 | –34,010 | 0 |
Operating expenses | 71,640 | 11,179 | 49,379 | 132,198 |
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Earnings before income tax | 61,354 | 5,339 | –32,307 | 34,386 |
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Taxes on income |
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| 4,489 |
Group net income |
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| 29,897 |
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Segment assets (in CHF million) | 6,414 | 76 | 7,009 | 13,499 |
Segment liabilities (in CHF million) | 10,902 | 963 | 584 | 12,448 |
Client assets under management (in CHF billion)1 | 39.8 | 12.7 | 0.0 | 52.6 |
Net new money (in CHF billion) | 0.3 | 0.4 | 0.0 | 0.7 |
Headcount (number of employees) | 376 | 89 | 548 | 1,013 |
Headcount (expressed as full-time equivalents) | 353.9 | 83.5 | 502.7 | 940.1 |
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as of 31.12.2020 |
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Segment assets (in CHF million) | 6,213 | 65 | 7,245 | 13,523 |
Segment liabilities (in CHF million)2 | 10,536 | 898 | 1,065 | 12,498 |
Client assets under management (in CHF billion)1 | 36.0 | 11.5 | 0.0 | 47.4 |
Net new money (in CHF billion) | 0.8 | 0.5 | 0.0 | 1.4 |
Headcount (number of employees) | 356 | 81 | 553 | 990 |
Headcount (expressed as full-time equivalents) | 334.2 | 75.3 | 507.5 | 917.1 |
- Calculation in accordance with Table P of the Guidelines to the Liechtenstein Banking Ordinance issued by the Government of Liechtenstein (FL-BankO).
- As per December 31, 2020, the amounts have been aligned by CHF 728 million from CH 9.808 million to CHF 10.536 million in the Intermediaries & Private Banking segment and from CHF 1.792 million to CHF 1.065 million in the segment Corporate Center.
The recharging of costs and earnings between the business units takes place on the basis of specific transfer prices. The transfer prices between the segments are reviewed annually and adjusted to reflect economic conditions.
01.01.–30.06.2020
in CHF 1,000 | Intermediaries & | Client | Corporate | Total |
|---|---|---|---|---|
Total net interest income | 51,882 | 1,163 | 4,331 | 57,376 |
Total net income from commission | 59,946 | 17,193 | –5,612 | 71,527 |
Income from trading activities | 16,558 | 1,431 | 14,524 | 32,512 |
Income from financial instruments | 0 | 0 | 4,850 | 4,850 |
Other income | 16 | 138 | 386 | 540 |
Total operating income | 128,402 | 19,925 | 18,479 | 166,805 |
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Personnel expenses | 32,307 | 5,700 | 43,311 | 81,318 |
General and administrative expenses | 2,652 | 2,542 | 23,797 | 28,991 |
Depreciation of property, equipment and intangible assets | 1,096 | 265 | 12,861 | 14,222 |
Credit loss expenses | 20,957 | –0 | –71 | 20,886 |
Provisions and losses | 667 | 0 | 151 | 818 |
Services to/from other segments | 31,655 | 1,308 | –32,963 | 0 |
Operating expenses | 89,335 | 9,815 | 47,085 | 146,235 |
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Earnings before income tax | 39,067 | 10,109 | –28,606 | 20,570 |
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Taxes on income |
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| 6,220 |
Group net income |
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| 14,350 |
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Segment assets (in CHF million) | 5,791 | 1 | 7,819 | 13,611 |
Segment liabilities (in CHF million) | 10,756 | 815 | 1,051 | 12,621 |
Client assets under management (in CHF billion)1 | 34.0 | 10.5 | 0.0 | 44.5 |
Net new money (in CHF billion) | 0.5 | 0.4 | 0.0 | 1.0 |
Headcount (number of employees) | 351 | 77 | 551 | 979 |
Headcount (expressed as full-time equivalents) | 328.2 | 72.0 | 507.7 | 908.0 |
- Calculation in accordance with Table P of the Guidelines to the Liechtenstein Banking Ordinance issued by the Government of Liechtenstein (FL-BankO).
Intermediaries & Private Banking
Segment results | ||||
in CHF 1,000 | 01.01.–30.06.2021 | 01.01.–30.06.2020 | Variance | Variance |
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Total net interest income | 49,146 | 51,882 | –2,736 | –5.3 |
Total net income from commission | 66,760 | 59,946 | 6,814 | 11.4 |
Income from trading activities | 16,324 | 16,558 | –233 | –1.4 |
Income from financial instruments | 0 | 0 | 0 | 0.0 |
Other income | 765 | 16 | 749 | n.a. |
Total operating income | 132,994 | 128,402 | 4,593 | 3.6 |
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Personnel expenses | 35,531 | 32,307 | 3,224 | 10.0 |
General and administrative expenses | 2,781 | 2,652 | 129 | 4.9 |
Depreciation of property, equipment and intangible assets | 1,321 | 1,096 | 224 | 20.4 |
Credit loss expenses | –520 | 20,957 | –21,477 | –102.5 |
Provisions and losses | 185 | 667 | –482 | –72.3 |
Services to/from other segments | 32,343 | 31,655 | 687 | 2.2 |
Operating expenses | 71,640 | 89,335 | –17,695 | –19.8 |
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Segment income before income tax | 61,354 | 39,067 | 22,288 | 57.1 |
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Additional information |
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Expenses/income ratio (in %)1 | 53.1 | 51.9 |
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Cost/income ratio (in %)2 | 53.9 | 69.6 |
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Client assets under management (in CHF billion) | 39.8 | 34.0 |
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Change in client assets under management | 10.7 | –4.1 |
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Net new money (in CHF billion) | 0.3 | 0.5 |
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Total operating income / average client assets under management (bp)3 | 70.2 | 74.0 |
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Segment result / average client assets under management (bp)3 | 32.4 | 22.5 |
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Cost/income ratio operating income (in %)4 | 53.4 | 51.9 | 1.5 | 3.0 |
Headcount (number of employees) | 376 | 351 | 25.0 | 7.1 |
Headcount (expressed as full-time equivalents) | 353.9 | 328.2 | 25.6 | 7.8 |
- Total operating expenses (without depreciation and amortisation, valuation allowances, provisions and losses) / total operating income.
- Total operating expenses / total net operating income = cost/income ratio strategy 2026.
- 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 “Intermediaries & Private Banking” business unit comprises the intermediaries and private banking business at the local and international locations as well as the universal banking and lending business.
Segment result
The pre-tax segment income rose from CHF 39.1 million to CHF 61.4 million compared to the previous-year period (CHF 22.3 million). In the first half of 2021, operating income could be increased, year-on-year, by CHF 4.6 million (3.6 per cent). This increase is mainly due to the income from commission business and services (11.4 per cent). The acquisition of the client business of Öhman Bank S.A. as well as the higher asset base and the associated higher recurring corporate earnings made a positive contribution to commission income. Net interest income from clients (–5.3 per cent) and trading activities (–1.4 per cent) decreased compared to the previous year. US dollar and euro interest payments in client business contributed significantly to this negative movement in interest income.
Operating expenses fell by CHF 17.7 million (minus 19.8 per cent) to CHF 71.6 million. This reduction is primarily due to the allowance for a single position of around CHF 20 million posted in the previous year. Personnel expenses and depreciation and amortisation increased by CHF 3.2 million and CHF 0.2 million respectively, due in part to the acquisition of the client business of Öhman Bank S.A.
At CHF 0.3 billion, net new money continued to develop positively in the reporting period of 2021 despite the challenges posed by COVID-19. The targeted recruitment of client advisors at our locations continued to generate net new money inflow in 2021. Thanks to intense market development activities, a positive inflow of net new money was again achieved in the European markets. Through the acquisition of the client business of Öhman Bank S.A., client assets amounting to CHF 1.0 billion were taken over. Client assets under management as of 30 June 2021 totalled CHF 39.8 billion (31 December 2020: CHF 36.0 billion). The headcount increased from 328 positions (30 June 2020) to 354 positions mainly due to the transfer of employees from the Öhman acquisition.
Client Solutions
Segment results | ||||
in CHF 1,000 | 01.01.–30.06.2021 | 01.01.–30.06.2020 | Variance | Variance |
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Total net interest income | 336 | 1,163 | –827 | –71.1 |
Total net income from commission | 14,947 | 17,193 | –2,247 | –13.1 |
Income from trading activities | 1,112 | 1,431 | –319 | –22.3 |
Income from financial instruments | 0 | 0 | 0 | 0.0 |
Other income | 123 | 138 | –15 | –10.9 |
Total operating income | 16,518 | 19,925 | –3,407 | –17.1 |
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Personnel expenses | 6,606 | 5,700 | 906 | 15.9 |
General and administrative expenses | 2,650 | 2,542 | 107 | 4.2 |
Depreciation of property, equipment and intangible assets | 260 | 265 | –5 | –1.9 |
Credit loss expenses | –6 | –0 | –6 | n.a. |
Provisions and losses | 2 | 0 | 2 | n.a. |
Services to/from other segments | 1,667 | 1,308 | 359 | 27.5 |
Operating expenses | 11,179 | 9,815 | 1,364 | 13.9 |
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Segment income before income tax | 5,339 | 10,109 | –4,771 | –47.2 |
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Additional information |
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Expenses/income ratio (in %)1 | 66.1 | 47.9 |
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Cost/income ratio (in %)2 | 67.7 | 49.3 |
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Client assets under management (in CHF billion) | 12.7 | 10.5 |
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Change in client assets under management | 11.0 | –7.3 |
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Net new money (in CHF billion) | 0.4 | 0.4 |
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Total operating income / average client assets under management (bp)3 | 27.3 | 36.4 |
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Segment result / average client assets under management (bp)3 | 8.8 | 18.5 |
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Cost/income ratio operating income (in %)4 | 66.6 | 48.3 | 18.4 | 38.0 |
Headcount (number of employees) | 89 | 77 | 12.0 | 15.6 |
Headcount (expressed as full-time equivalents) | 83.5 | 72.0 | 11.5 | 15.9 |
- Total operating expenses (without depreciation and amortisation, valuation allowances, provisions and losses) / total operating income.
- Total operating expenses / total net operating income = cost/income ratio strategy 2026.
- 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 “Client Solutions” business unit now comprises the following teams: CSL Office, Private Investment Partners, Collective Private Markets Investments, CSL Access Partners, Fund Client & Investment Services, Philanthropy and Impact, CSL Operations and CSL Legal Risk & Compliance. The fund management companies VP Fund Solutions (Luxembourg) SA and VP Fund Solutions (Liechtenstein) AG remain as independent companies and are now part of Client Solutions.
Through a modular and open investment and structuring platform, Client Solutions will create systematic access to investment opportunities in the private markets. The business unit assumes responsibility for earnings and results.
Segment result
The pre-tax segment income fell by CHF 4.8 million in the first half of 2021 compared to the same period of the previous year. Operating income declined in particular due to the income from commission business and services (mainly transaction-based income) and the decline in US dollar interest income. Operating expenses increased by CHF 1.4 million to CHF 11.2 million as a result of establishing the new business unit.
At CHF 0.4 billion, net new money in the fund business again trended upwards in the first half of 2021. Client assets under management as of 30 June 2021 totalled CHF 12.7 billion (31 December 2020: CHF 11.5 billion). The employee headcount rose from 72 (30 June 2020) to 84 positions.
Corporate Center
Segment results | ||||
in CHF 1,000 | 01.01.–30.06.2021 | 01.01.–30.06.2020 | Variance | Variance |
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Total net interest income | 6,402 | 4,331 | 2,071 | 47.8 |
Total net income from commission | –3,703 | –5,612 | 1,909 | 34.0 |
Income from trading activities | 6,681 | 14,524 | –7,843 | –54.0 |
Income from financial instruments | 7,348 | 4,850 | 2,498 | 51.5 |
Other income | 344 | 386 | –42 | –10.8 |
Total operating income | 17,072 | 18,479 | –1,407 | –7.6 |
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Personnel expenses | 43,875 | 43,311 | 565 | 1.3 |
General and administrative expenses | 25,567 | 23,797 | 1,770 | 7.4 |
Depreciation of property, equipment and intangible assets | 13,951 | 12,861 | 1,091 | 8.5 |
Credit loss expenses | –7 | –71 | 64 | 90.4 |
Provisions and losses | 2 | 151 | –149 | –98.5 |
Services to/from other segments | –34,010 | –32,963 | –1,047 | –3.2 |
Operating expenses | 49,379 | 47,085 | 2,294 | 4.9 |
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Segment income before income tax | –32,307 | –28,606 | –3,701 | –12.9 |
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Additional information |
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Headcount (number of employees) | 548 | 551 | –3.0 | –0.5 |
Headcount (expressed as full-time equivalents) | 502.7 | 507.7 | –5.0 | –1.0 |
Structure
The “Corporate Center” is of great importance for banking operations and the processing of business transactions. In addition, those earnings and expenses of VP Bank Group that have no direct relationship to client-oriented business units, as well as consolidation adjustments, are reported under the Corporate Center. The revenue-generating business activities of the segment “Corporate Center” are associated with the exercise of 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.
Segment result
The pre-tax segment income in the first half of 2021 amounted to minus CHF 32.3 million as opposed to minus CHF 28.6 million in the previous-year period.
In the first half of 2021, operating income fell slightly by CHF 1.4 million on that of the previous-year period.
Net interest income increased by CHF 2.1 million compared with the previous-year period. This is largely due to optimisation of investments of liquid funds.
Commission and service income saw a fall in revenues. This includes bank commissions which are invoiced to front business units by the service units through internal recharging.
Income received by Group Treasury & Execution is reported under income from trading activities. This relates to income generated from the execution of foreign-exchange trades. Income from derivatives for risk minimisation and income from balance sheet management are disclosed under this position too. Income from trading activities decreased by CHF 7.8 million compared to the previous year. This reduction is mainly due to the reduced US dollar and euro interest margins.
Income from financial investments totalled CHF 7.3 million in the first half of 2021 due to higher dividend income. This position recorded a result of CHF 4.9 million in the previous-year period.
Operating expenses increased by CHF 2.3 million from CHF 47.1 million to CHF 49.4 million in the reporting period. This increase is mainly due to investments in connection with the IT strategy. Depreciation and amortisation increased by CHF 1.1 million due to the commissioning of strategic projects.