Segment reporting
Structure
The external segment reporting reflects the organisational structure of VP Bank Group as of 30 June 2022 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 grouped 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.
01.01.–30.06.2022
in CHF 1,000 | Intermediaries & | Client | Corporate | Total |
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Total net interest income | 49,223 | 349 | 6,052 | 55,624 |
Total net income from commission | 62,075 | 14,063 | –4,171 | 71,967 |
Income from trading activities | 15,716 | 1,398 | 9,988 | 27,102 |
Income from financial instruments | 0 | 1,278 | 5,259 | 6,537 |
Other income | 18 | 4 | 249 | 271 |
Total operating income | 127,032 | 17,092 | 17,377 | 161,501 |
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Personnel expenses | 33,960 | 7,349 | 44,099 | 85,408 |
General and administrative expenses | 3,313 | 3,337 | 30,097 | 36,747 |
Depreciation of property, equipment and intangible assets | 2,044 | 290 | 16,683 | 19,017 |
Credit loss expenses | –3,746 | –18 | –29 | –3,793 |
Provisions and losses | 804 | 229 | –21 | 1,012 |
Services to/from other segments | 37,120 | 1,854 | –38,974 | 0 |
Operating expenses | 73,495 | 13,041 | 51,855 | 138,391 |
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Earnings before income tax | 53,537 | 4,051 | –34,478 | 23,110 |
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Taxes on income |
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| 1,783 |
Group net income |
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| 21,327 |
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Segment assets (in CHF million) | 5,832 | 89 | 7,706 | 13,627 |
Segment liabilities (in CHF million) | 10,953 | 714 | 881 | 12,548 |
Client assets under management (in CHF billion)1 | 35.6 | 11.0 | 0.0 | 46.5 |
Net new money (in CHF billion) | –0.1 | 0.3 | 0.0 | 0.2 |
Headcount (number of employees) | 371 | 90 | 550 | 1,011 |
Headcount (expressed as full-time equivalents) | 345.5 | 85.7 | 504.1 | 935.3 |
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as of 31.12.2021 |
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Segment assets (in CHF million)2 | 6,202 | 85 | 6,910 | 13,196 |
Segment liabilities (in CHF million) | 10,809 | 832 | 469 | 12,111 |
Client assets under management (in CHF billion)1 | 39.6 | 11.6 | 0.0 | 51.3 |
Net new money (in CHF billion) | 0.8 | –0.5 | 0.0 | 0.3 |
Headcount (number of employees) | 384 | 90 | 538 | 1,012 |
Headcount (expressed as full-time equivalents) | 360.0 | 85.9 | 492.6 | 938.5 |
- Calculation in accordance with Table P of the Guidelines to the Liechtenstein Banking Ordinance issued by the Government of Liechtenstein (FL-BankO).
- Due to internal reorganisation, defined financial instruments with the associated income from financial investments are transferred from Corporate Center to Client Solutions.
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.–30.06.2021
in CHF 1,000 | Intermediaries & | Client | Corporate | Total |
|---|---|---|---|---|
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 instruments1 | 0 | 1,400 | 5,948 | 7,348 |
Other income | 765 | 123 | 344 | 1,232 |
Total operating income | 132,994 | 17,918 | 15,672 | 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 | 6,739 | –33,707 | 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)1 | 6,414 | 123 | 6,963 | 13,499 |
Segment liabilities (in CHF million) | 10,902 | 963 | 584 | 12,448 |
Client assets under management (in CHF billion)2 | 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 |
- Due to internal reorganisation, defined financial instruments with the associated income from financial investments are transferred from Corporate Center to Client Solutions.
- 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.–30.06.2022 | 01.01.–30.06.2021 | Variance | Variance |
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Total net interest income | 49,223 | 49,146 | 77 | 0.2 |
Total net income from commission | 62,075 | 66,760 | –4,685 | –7.0 |
Income from trading activities | 15,716 | 16,324 | –608 | –3.7 |
Income from financial instruments | 0 | 0 | 0 | 0.0 |
Other income | 18 | 765 | –747 | –97.6 |
Total operating income | 127,032 | 132,994 | –5,962 | –4.5 |
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Personnel expenses | 33,960 | 35,531 | –1,571 | –4.4 |
General and administrative expenses | 3,313 | 2,781 | 532 | 19.1 |
Depreciation of property, equipment and intangible assets | 2,044 | 1,321 | 723 | 54.8 |
Credit loss expenses | –3,746 | –520 | –3,226 | n.a. |
Provisions and losses | 804 | 185 | 619 | 335.6 |
Services to/from other segments | 37,120 | 32,343 | 4,777 | 14.8 |
Operating expenses | 73,495 | 71,640 | 1,855 | 2.6 |
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Segment income before income tax | 53,537 | 61,354 | –7,817 | –12.7 |
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Additional information |
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Cost/income ratio strategy 2020 (in %)1 | 58.6 | 53.1 |
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Cost/income ratio strategy 2026 (in %)2 | 57.9 | 53.9 |
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Client assets under management (in CHF billion) | 35.6 | 39.8 |
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Change in client assets under management | –10.2 | 10.7 |
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Net new money (in CHF billion) | –0.1 | 0.3 |
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Total operating income / average client assets under management (bp)3 | 67.5 | 70.2 |
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Segment result / average client assets under management (bp)3 | 28.5 | 32.4 |
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Cost/income ratio operating income (in %)4 | 58.6 | 53.4 | 5.1 | 9.6 |
Headcount (number of employees) | 371 | 376 | –5.0 | –1.3 |
Headcount (expressed as full-time equivalents) | 345.5 | 353.9 | –8.4 | –2.4 |
- Total operating expenses (without depreciation and amortisation, valuation allowances, provisions and losses) / total operating income.
- Total operating expenses / total operating income.
- 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 in Liechtenstein.
Segment income
The pre-tax segment income fell in 2022 from CHF 61.4 million to CHF 53.5 million compared to the previous-year period (CHF –7.8 million).
In the first half of 2022, operating income declined by CHF 6.0 million (4.5 per cent) over that of the previous-year period. This decrease results from the income from commission business and services (–7 per cent) and income from trading activities (–3.7 per cent). The main factors contributing to this negative development were the lower transaction-based income, due to both declining client activity and the lower asset base as a result of the market corrections, and the associated lower recurring income. The first positive effects from payment of interest in US dollars are already evident in the net interest income (+0.2 per cent).
Operating expenses increased by CHF 1.9 million or 2.6 per cent to CHF 73.5 million. The positions performed variably during the reporting period. On the one hand, personnel expenses (–4.4 per cent) and valuation adjustments improved compared to the previous-year period. On the other hand, services to/from other segments as well as depreciation and amortisation increased in particular.
Net new money recorded a slight net new money outflow of CHF 0.1 billion in the reporting period. New money inflows from market cultivation were reduced by outflows due to the more difficult framework conditions in the first half of 2022. Client assets under management as of 30 June 2022 totalled CHF 35.6 billion (31 December 2021: CHF 39.6 billion). CHF 0.2 billion of assets from sanctioned Russian clients were reclassified as custody assets. The headcount decreased from 360 positions to 346 positions in the reporting year.
Client Solutions
Segment results | ||||
in CHF 1,000 | 01.01.–30.06.2022 | 01.01.–30.06.2021 | Variance | Variance |
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Total net interest income | 349 | 336 | 13 | 3.8 |
Total net income from commission | 14,063 | 14,947 | –884 | –5.9 |
Income from trading activities | 1,398 | 1,112 | 286 | 25.7 |
Income from financial instruments | 1,278 | 1,400 | –122 | –8.7 |
Other income | 4 | 123 | –119 | –96.7 |
Total operating income | 17,092 | 17,918 | –826 | –4.6 |
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Personnel expenses | 7,349 | 6,606 | 743 | 11.2 |
General and administrative expenses | 3,337 | 2,650 | 687 | 25.9 |
Depreciation of property, equipment and intangible assets | 290 | 260 | 30 | 11.5 |
Credit loss expenses | –18 | –6 | –12 | –189.4 |
Provisions and losses | 229 | 2 | 227 | n.a. |
Services to/from other segments | 1,854 | 1,667 | 187 | 11.2 |
Operating expenses | 13,041 | 11,179 | 1,862 | 16.7 |
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Segment income before income tax | 4,051 | 6,739 | –2,688 | –39.9 |
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Additional information |
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Cost/income ratio strategy 2020 (in %)1 | 73.4 | 61.0 |
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Cost/income ratio strategy 2026 (in %)2 | 76.3 | 62.4 |
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Client assets under management (in CHF billion) | 11.0 | 12.7 |
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Change in client assets under management | –5.8 | 11.0 |
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Net new money (in CHF billion) | 0.3 | 0.4 |
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Total operating income / average client assets under management (bp)3 | 30.3 | 29.7 |
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Segment result / average client assets under management (bp)3 | 7.2 | 11.2 |
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Cost/income ratio operating income (in %)4 | 79.3 | 66.6 | 12.7 | 19.0 |
Headcount (number of employees) | 90 | 89 | 1.0 | 1.1 |
Headcount (expressed as full-time equivalents) | 85.7 | 83.5 | 2.2 | 2.6 |
- Total operating expenses (without depreciation and amortisation, valuation allowances, provisions and losses) / total operating income.
- Total operating expenses / total operating income.
- 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 comprises the following teams: Direct Private Markets Investments, Collective Private Markets Investments, CSL Access Partners, Fund Client & Investment Services, Philanthropy & Impact, CSL Operations, CSL Legal, Risk & Compliance, Group Product & Service Center and CSL Office. The two fund management companies VP Fund Solutions (Luxembourg) SA and VP Fund Solutions (Liechtenstein) AG remain as independent legal entities and are now part of Client Solutions. Some individually defined financial instruments are managed in the “Client Solutions” business unit.
The new business unit is off to a successful start with the development of a modular, open investment and structuring platform that allows for systematic access to private market investment opportunities. The first private market financing transactions have already been structured and placed. The business unit assumes responsibility for earnings and income.
Segment income
In the first half of 2022, the pre-tax segment income decreased by CHF 2.7 million to CHF 4.1 million compared to the previous-year period.
Operating income fell by CHF 0.8 million to CHF 17.1 million. Market corrections on the financial markets had a negative impact on client assets and consequently on the recurring commission income, which decreased by CHF 0.9 million compared to the previous year. Income from trading activities increased by CHF 0.3 million compared to the previous-year period.
Operating expenses increased by CHF 1.9 million to CHF 13.0 million, which can be attributed to the creation of the new business unit.
The fund business was again positive in the first half of 2022, with an inflow of new money of CHF 0.3 billion. Client assets under management as of 30 June 2022 totalled CHF 11.0 billion (31 December 2021: CHF 11.6 billion). The headcount in the reporting year was slightly above the previous year’s level at 86.
Corporate Center
Segment results | ||||
in CHF 1,000 | 01.01.–30.06.2022 | 01.01.–30.06.2021 | Variance | Variance |
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Total net interest income | 6,052 | 6,402 | –350 | –5.5 |
Total net income from commission | –4,171 | –3,703 | –468 | –12.6 |
Income from trading activities | 9,988 | 6,681 | 3,307 | 49.5 |
Income from financial instruments | 5,259 | 5,948 | –689 | –11.6 |
Other income | 249 | 344 | –95 | –27.7 |
Total operating income | 17,377 | 15,672 | 1,705 | 10.9 |
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Personnel expenses | 44,099 | 43,875 | 224 | 0.5 |
General and administrative expenses | 30,097 | 25,567 | 4,530 | 17.7 |
Depreciation of property, equipment and intangible assets | 16,683 | 13,951 | 2,732 | 19.6 |
Credit loss expenses | –29 | –7 | –22 | –323.0 |
Provisions and losses | –21 | 2 | –23 | n.a. |
Services to/from other segments | –38,974 | –34,010 | –4,964 | –14.6 |
Operating expenses | 51,855 | 49,379 | 2,476 | 5.0 |
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Segment income before income tax | –34,478 | –33,707 | –771 | –2.3 |
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Additional information |
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Headcount (number of employees) | 550 | 548 | 2.0 | 0.4 |
Headcount (expressed as full-time equivalents) | 504.1 | 502.7 | 1.4 | 0.3 |
Structure
The “Corporate Center” business unit 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 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 income
The pre-tax segment income in the first half of 2022 amounted to CHF –34.5 million vis-à-vis CHF –33.7 million in the previous-year period.
Operating income increased by CHF 1.7 million in the first half of 2022 vis-à-vis the previous year. This increase is largely due to income from trading activities. Net interest income decreased slightly by CHF 0.4 million. Income from commission business and services decreased. This includes bank commissions which were invoiced to front business units by the service units through internal recharging. Income received from 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 increased by CHF 3.3 million compared to the previous year. This increase is mainly due to higher USD interest margins. Income from financial investments totalled CHF 5.3 million in the first half of 2022. This position recorded a result of CHF 5.9 million in the previous-year period.
Operating expenses in the reporting period increased by CHF 2.5 million to CHF 51.9 million. This increase in general and administrative expenses is mainly due to investments in strategy implementation. Depreciation and amortisation increased compared to the previous year as a result of the outsourcing of the IT infrastructure to Swisscom in the first half of 2022.