Statement by the Chairman of the Board and the Chief Executive Officer

Dear Shareholders, 

Ladies and Gentlemen

VP Bank stayed its course towards sustainable growth in the first half of 2021 and made significant headway in the implementation of its strategy. The market environment and overall economic growth were firmly in the grip of the corona­virus at the beginning of the year. Eurozone and Swiss GDP readings suffered ­further setbacks in the first quarter as containment measures took their toll on the economy. Fortunately, lockdowns as well as progress in vaccination and testing but also warmer temperatures succeeded in curbing the viral spread as the spring months progressed. A wave of reopenings in the services sector provided a strong economic boost. Manufacturers were pleased with their brim-full order books, but a shortage of materials hindered the production of many final goods. Overall, though, the first half of the year was marked by a reawakening of the global economy. The central banks have maintained their expansionary monetary policies despite sharply rising inflation rates, which they consider to be merely a transitory phenomenon.

Despite this challenging environment, VP Bank Group managed to record solid half-year results. Our consolidated net income of CHF 29.9 million came in significantly higher compared to the prior-year period (CHF 14.4 million). This doubling of last year’s H1 result, which was burdened by a one-time charge of ca. CHF 20 million, follows through on the fine results achieved in the preceding years and is evidence of the Bank’s steady course. Versus the first half of 2020, income from the commission business and services rose by 9.1 per cent to CHF 78 million, whilst income from financial instruments also made a positive contribution to net profit by increasing 51.5 per cent to CHF 7.3 million. Trading activities generated income of CHF 24.1 million, down by CHF 8.4 million compared to H1 2020. This was mainly due to the US Federal Reserve and ECB rate cuts in the first half of 2020, which ultimately had a negative impact on the margins for swap transactions. Personnel expenses (up 5.8 per cent to CHF 86 million) and general and adminis­trative expenses (up 6.9 per cent to CHF 31 million) were in line with the planned investments for the implementation of our Strategy 2026.

The generally solid performance of VP Bank Group is also reflected in the first semester increase in client assets under management (excluding custody assets) of 10.8 per cent to CHF 52.6 billion. This larger sum is attributable to yet another net inflow of new money (CHF 0.7 billion), the acquisition of the private banking business of Öhman Bank S.A. (CHF 0.9 billion) and a higher mark-to-market valuation totalling CHF 3.5 billion.

VP Bank is still sturdily capitalised. Its tier 1 capital ratio of 20.8 per cent far exceeds the regulatory minimum requirements as well as our own ambitious ­long-term target reading of at least 20 per cent.

Based on VP Bank’s 2020 annual net profit and in keeping with our long-standing dividend payout policy, CHF 4.00 per class A registered share was distributed on 6 May 2021, which equates to a dividend yield of roughly 3.5 per cent. 

In the first half of 2021, the shares of VP Bank Group recorded a total return (including dividends) of 2.6 per cent. The share price fluctuated during that period in a range between CHF 110.00 (on 1 February and 20 May 2021) and CHF 124.00 (reached on 8 March 2021).

Senior management of VP Bank conducted numerous discussions with analysts and investors during the first half of 2021 and took part in several roadshows. The analysts’ ratings remained unchanged, with three “Buy” recommendations and one “Overweight”. Moreover, in July 2021 Standard & Poor’s reaffirmed the Bank’s fine "A" rating as well as our prudent and consistent business policy.

We are convinced that conventional approaches to wealth management need to be rethought. Only this way can success be achieved in the future. For that reason, our Strategy 2026 aims to establish VP Bank as an international Open Wealth Services pioneer. Going forward, by making available a discrete platform for wealth-related services, we will provide the means for combining traditional banking activities with the advantages and benefits of digital ­eco­systems. Details of this revolutionary approach were already presented in our annual report 2020. 

This transformation to an open platform is the logical extension of our business relationships with intermediaries and high net worth individuals. In future, clients will be able to choose from a modular offering that encompasses both the Bank’s own services and those of com­plementary third-party providers. They will be able to do so conveniently, regardless of user medium, and need not have a direct account/deposit relationship with VP Bank. Thanks to the additional range of offerings from specialised third-party providers, clients will benefit from a vast array of products and services that go beyond the traditional to also include ­sustainable investment opportunities, private market investments, and even the possibility to engage in digitalised assets. By enabling non-customers to access certain parts of this offering, we significantly increase our addressable market, in particular via our broad network of financial intermediaries.

It goes without saying that our Strategy 2026 is based on VP Bank’s strong existing business, which we will continue to develop in a targeted manner. With a resolute focus on client needs, VP Bank is active and ideally positioned in our home market of Liechtenstein as well as at five additional locations worldwide, namely in Switzerland, Luxembourg, Singapore, Hong Kong and the British Virgin Islands. Our clearly defined regional strategies are aimed at achieving profitable and sustainable growth at all of the Bank’s six international locations. In January, we completed the acquisition of the client business of Luxembourg-based Öhman Bank S.A. The inclusion of these new employees and the migration of client assets will contribute signi­ficantly to the expansion of our activities in the Luxembourg and Scandinavian markets. VP Bank’s conclusion of a cooperation agreement with Hywin Wealth Management Co. and equity investment in Hywin Holdings Ltd. in March marked another important step in the development of our Asian business. Targeted additions to our partnership network represent a key building block in the development of a wider, highly attractive client base in this region. Through the appointment of a new head of VP Bank’s Asian activities, as well as the onboarding of further personnel who bring with them an extensive local client network, the Singapore and Hong Kong offices have also been strengthened with additional expertise. In Hong Kong, we can now look back on 15 years of presence, and it fills us with pride that regular awards attest to our commitment to and expertise in Asia. For instance, VP Bank Ltd Singapore Branch was named “Best Private Bank – Intermediary Services” at the Asian Private Banker Awards for Distinction ceremony in January, and “Best Boutique Private Bank” in connection with the WealthBriefingAsia Awards in June. 

The consistent observance of sustainability at both the banking and investment levels is another important cornerstone of our Strategy 2026. VP Bank’s inclusion this past February in SIX Swiss Exchange’s two sustainability indices, the “SPI ESG” and “SPI ESG Weighted”, vouches for our being on the right track in this regard. Since the beginning of the year, sustainability criteria have been an integral part of all our investment and advisory processes. In contrast to our competitors, sustainability is also the new standard for VP Bank’s interaction with advisory-only clients and not just our discretionary mandates. We provide clients with transparent information on the sustainability profile of their investment, this on the basis of our proprietary VP Bank Sustainability Score. This metric has been integrated into all mandates since January and displayed on all asset statements since March. We also demonstrate our commitment to sustainability at the corporate level: VP Bank has published its first comprehensive sustainability report. The Bank is also a new signatory to the UN Principles for Responsible Investment (PRI) and the UN Principles for Responsible Banking (PRB). By having done so, we underscore our determination to anchor sustainability throughout the VP Bank Group and report on the progress being made.

Regulatory requirements governing direct contact with banking clients have increased significantly. It is therefore crucial that the Bank’s processes function as efficiently as possible and that our core competence – namely, personalised advice – remains clearly in focus. In January we introduced the RM Cockpit, a centralised tool that provides a holistic view of the client and thereby facilitates the rendering of targeted advice. 

Without a doubt, the efficiency and effectiveness of our IT systems as well as VP Bank’s open, service-enabled core banking system constitute key pillars of our Strategy 2026. It is equally clear that technology partners play a vital role in this regard. Therefore, early this year we entered into a strategic cooperation with Swisscom aimed at ensuring the reliable operation of our IT infrastructure. In June, we also arranged for an innovation partnership with InvestCloud in order to lay the foundation for providing personalised wealth management services via ecosystems. With InvestCloud as an experienced partner at our side, we will be in a position to offer bundled investment solutions that are precisely tailored to meet our clients’ needs, as well as to forge ahead with further innovations.

Aside from the further development of our existing Group-wide business activities and the optimisation and scaling of our processes and systems, new business models and opportu­nities form the third key pillar of our Strategy 2026. Collectively, these pillars will ultimately result in the fulfilment of our ambition to establish VP Bank as an international Open Wealth Service pioneer. In the first half of 2021, our recently created Client Solutions unit successfully completed preparatory work for the launch of the Orbit ecosystem, which will facilitate easy access to the “Private Market” asset class, a market segment that to date has been difficult for investors to enter. 

Moreover, with a pilot project focused on the digitalisation of art assets, we are also laying the groundwork for a Blockchain-based future. It is our firm belief that the digitalisation of non-bankable assets meets a growing need and that in Liechtenstein, thanks to the Princi­pality’s recently adopted Blockchain Act (TVGT), we now have the crucial legal framework necessary to be successful also in this area. 

At VP Bank’s 58th annual general meeting on 30 April 2021, shareholders re-elected Dr Thomas R. Meier to the Board of Directors for a further three-year term of office. Fredy Vogt waived re-election and stepped down from the Board of Directors. Philipp Elkuch was elected as a new member of the Board for a term of three years. His presence will reinforce the digital competence of the Board of Directors and bear evidence to VP Bank’s commit­­ment to its home market of Liechtenstein.

Already in 2020, we began to lay the organisational foundation for our Strategy 2026 and strengthen Group Executive Management by adding key leadership and technical expertise. In March, the GEM was rounded out through the formal appointment of Roger Barmettler as Chief Financial Officer. Last year’s appointments of Tobias Wehrli as Head of Intermediaries and Private Banking and Thomas von Hohenhau as Head of Client Solutions combine to afford us comprehensive expertise in both the traditional wealth management business and the ­digital domain. Under the leadership of VP Bank’s new Chief Risk Officer, Patrick Bont, our risk management processes, governance and regulations have been modernised, thereby providing us with a stable foundation for further strategic growth. 

In the person of Pamela Hsu Phua, we managed to recruit as the new CEO of VP Bank Asia a widely recognised leader in Greater Asia with an outstanding record of success. She assumed that post on 1 July 2021. Given her extensive network in the Asian markets, she will bear responsibility from Singapore for both the Singapore and Hong Kong businesses and will play a decisive role in the further development of our Asia strategy. Also effective as of 1 July, Wolfdieter Schnee was appointed to the Executive Board of VP Fund Solutions (Liechtenstein) AG. He will retain his current function as Head of Client Services whilst con­tributing to the sharper client focus of VP Fund Solutions. 

The progress and milestones achieved in the first half of the year attest to the viability of our Strategy 2026 and demonstrate that VP Bank Group is well on the way to achieving its ambitious goals. The second semester of 2021 presents yet another multitude of impon­derables. The coronavirus pandemic and its impact on the economy are likely to remain a ­challenge for the markets as well as investors. Hence, the ability to identify relevant risks and exploit the right opportunities will become all the more important. 

We will continue to pursue our Strategy 2026 in the second half of the year, this in a tar­­geted manner and in keeping with a clearly defined set of measures. One focal point will be actively developing the capabilities and appeal of private market solutions in the Orbit eco­system. New products, such as further solutions in the area of sustainability and the digitalisation of ­addi­tional non-bankable assets, will play a role here. We are also resolutely pressing ahead with the implementation of our IT strategy. A significant contribution in this regard will be made by VP Bank’s Chief Transformation Officer, who will take up this newly created post on 1 December and from that date bear responsibility for the overall management of the Bank’s transformation programme as well as promote the further development of our ­seamless Client Journeys that agilely traverses organisational structures and departmental boundaries. 

It remains our aim to achieve a Group net profit of CHF 100 million by the end of the 2026 strategy cycle as well as to meet additional quantitative targets, namely: a profit margin of more than 15 basis points; a cost/income ratio of no more than 70 per cent by the end of 2026; an average tier 1 ratio in excess of 20 per cent over the cycle; and an annual 4 per cent rate of growth in net new money over the cycle (NB: the latter goal may be unachievable in the current financial year due to anticipated outflows from institutional fund clients).

We would be remiss by not expressing our sincere thanks to you, VP Bank’s valued clients and shareholders, for your loyalty and the abiding trust you place in us. You are the ones who give VP Bank Group the kind of stability that makes it possible for us to think in terms of strategy cycles and plan accordingly in a sustainable and farsighted manner. 

Special thanks also go to our employees across the globe for their dedicated efforts. Trans­formation requires that we break away from existing structures, demonstrate a high level of commitment, and come up with many new ideas. The pioneering spirit is in our Bank’s DNA and has enabled us time and again over the past 65 years to successfully change and adapt to long-term trends. We are convinced that our ingenuity, coupled with the talent and devotion of each and every one of us, will result in our ambitions becoming a successful reality.