Statement by the chairman of the board and the chief executive officer

A challenging first half of the year lies behind us. At the beginning of the year, the signs were pointing towards a strong economic recovery in the aftermath of the pandemic. However, Russia’s war of aggression against Ukraine brought on human suffering and severe economic consequences in Europe and the world. The already high energy prices climbed even higher, and the strained supply chain situation got worse. Despite an uncertain economic environment, the central banks were compelled to return to a more restrictive monetary policy in view of high inflation rates. The US Federal Reserve set a clear course with a remarkably aggressive approach, but the Swiss National Bank also surprised the markets with an unexpectedly large interest rate hike. The economic outlook recently deteriorated further: Europe is facing an energy crisis due to the prospect of an unreliable supply of natural gas from Russia. The risk of a recession has thus increased substantially, with the mix of unfavourable factors putting the markets under considerable pressure.

In this challenging market environment and against the backdrop of a continuation of substantial investments in Strategy 2026, VP Bank achieved profits for the half-year of CHF 21.3 million. Despite the sharp rise in uncertainty in the market, our business model proved to be resilient. Our clients entrusted us with a net volume of new money totalling CHF 0.2 billion. The primary contributors to this result were the intermediary and private client business in Asia and the two fund management companies in Liechtenstein and Luxembourg.

Overall, operating income decreased to CHF 161.5 million, primarily due to a drop in transaction-based income from commission business and services. Recurring commission income and net interest income remained relatively stable, while income from trading activities trended positive. With a value of roughly CHF 0.2 billion, the Russian client assets under management that are now affected by sanctions had no significant impact on operating income in the first half of the year. However, implementation of the restrictions and regulatory requirements generated extraordinary costs that are now reflected on the expense side. This, together with additional investments in Strategy 2026 and related depreciation and amortisation, led to slightly higher operating expenses of CHF 138.4 million. The programme to reduce the operating cost basis announced at the beginning of the year is being implemented.

With a tier 1 ratio of 22.8 per cent, VP Bank has an extremely strong equity base. Total assets are stable at CHF 13.6 billion.

With Strategy 2026, we are rethinking wealth management and combining the traditional business with the advantages of ecosystems. In the past half-year, we once again came a bit closer to the realisation of this vision. Thanks to our broad-based client base, our existing business proved to be robust and stable in the face of external influences such as the war in Ukraine and a volatile market environment.

With our intermediary and private client business at six locations as well as the two fund management companies, we are not only well positioned, but have also consolidated this position in a targeted manner. The key pillar in the revenue mix remains our home market of Liechtenstein, where we operate as a universal bank. The two fund locations were able to confirm their positive trend in growth and earnings. Under new management, the Asia region also delivered its first significant results in the first half of the year, leading to a positive development of net new money. To further expand our business in the European region, the two locations in Zurich and Luxembourg were placed under regional management at the beginning of 2022. Priority is being given to increase the profitable growth of the Zurich location and further development of the Luxembourg location, including additional expansion of client activities in the target market of Germany and in the Nordics. 

Innovations and ecosystems form the basis of a successful future for VP Bank. The offer of tokenisation of real assets such as paintings, watches and sculptures launched at the end of 2021 met with lively client interest. By developing into a leading Open Wealth Service provider, VP Bank is ensuring that it will continue to be a reliable partner with a comprehensive, innovative offer for its clients. With the establishment of open IT interfaces for products and services from complementary third-party providers, the technological foundations for opening up the core banking system were laid by the end of June. We also reached an important milestone in May with the outsourcing of essential parts of the IT infrastructure to Swisscom.

Current political and economic developments are now presenting us with a situation that differs from the one we were faced with six months ago. We therefore feel compelled to review our ambitious 2026 financial targets and adjust them if necessary. However, we are holding fast to the content of Strategy 2026, and we will continue to press ahead with it and its strategic initiatives and milestones. 

The technological basis for Open Wealth has been laid. In the second half of the year, we will now begin subjecting the first client services to pilot runs, including completely digital client account opening for intermediaries and automated lombard lending. We are also continuing to promote the offerings and services related to tokenisation by connecting services to corresponding ecosystems in this area as well. Our focus remains on sustainable reduction Of our operating cost basis. Initial results from the productivity and efficiency improvement programme announced at the beginning of the year will become visible in the second half of the year.

On 29 April 2022, the general meeting of VP Bank approved a dividend of CHF 5.00 per registered share A and CHF 0.50 per registered share B, resulting in a dividend payout ratio of 60 per cent of the Group net income generated. 

Rating agency Standard & Poor’s (S&P) confirmed the good “A/A–1” rating on 20 July 2022. According to its assessment, VP Bank has successfully strengthened its risk management systems following the credit event in March 2020. This new strength has also been demonstrated in the volatile market environment resulting from the pandemic and the war in Ukraine. The continued negative outlook is related to the fact that the industry as a whole is suffering due to challenging market conditions and structural margin pressure, making it difficult to achieve ambitious financial targets.

We would like to extend our thanks to our shareholders and clients for their ongoing loyalty and trust. The current market environment provides opportunities, but also demands great discipline in matters of efficiency and risk. We are actively monitoring and managing these risks while working with our Strategy 2026 to remain a reliable and innovative bank in future.

It is our employees who are successfully driving the development of VP Bank. We would like to thank them for their great commitment. Having skilled professionals on staff who show extraordinary dedication to their work is certainly not a matter of course in today’s world. We are pleased to be able to rely on their loyalty and expertise.