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LGT Group posts good business performance in 2013

March 20, 2014

LGT Group achieved good results in the 2013 financial year in its core businesses. Net asset inflows totaled CHF 7.5 billion (growth of 7%) and assets under management increased to CHF 110.7 billion. With a tier 1 capital ratio of 21.3%, LGT is very well capitalized. LGT is confident about its business performance in the current year.

The income from services rose 15% in the period under review, however the low interest rate environment and lower valuation gains led to a 7% decline in total operating income. Operating expenses were 11% higher due to a change to the LGT pension fund plan that was recognized in 2012. Group profit amounted to CHF 139.2 million.

 

LGT Group achieved good results in the 2013 financial year in its core businesses, Private Banking and Asset Management. Supported by its larger asset base and healthy market conditions, which helped to increase client activity, LGT grew its income from services by 15% compared with 2012 to CHF 648.6 million. As interest rates remained low, net interest and similar income fell by 28% compared with the previous year to CHF 80.1 million. High-quality bonds, which LGT holds for liquidity management reasons, generated lower valuation gains in 2013 than in the exceptionally strong previous year, leading to a 42% drop in income from trading activities and other income to CHF 166.1 million. Overall, LGT posted a 7% decline in total operating income to CHF 894.8 million compared with 2012.

Personnel expenses in the period under review were 20% higher totaling CHF 531.1 million, reflecting a one-off contribution of a change to the LGT pension fund plan recognized in 2012. Without this positive effect in the previous year, personnel expenses would have remained stable in 2013 despite higher headcount. Business and office expenses were reduced by 11% to CHF 157.3 million, thanks to good control over costs while making further substantial investments to grow the business. Total operating expenses amounted to CHF 688.4 million in 2013. The cost-income ratio was 77%.

Depreciation, amortization and provisions declined by 34% to CHF 57.6 million, reflecting goodwill amortization recognized in 2012. LGT Bank (Switzerland) Ltd.’s share of the upfront payment made by the Swiss banks under the withholding tax agree-ment with the United Kingdom is included in this amount. Tax expense was significantly lower year on year due to the tax effect of the aforementioned contribution of a change to the pension fund plan in 2012.

Overall, solid group profit of CHF 139.2 million was posted for 2013, which is down 35% compared with the previous year. LGT Group is very well capitalized and maintains a high level of liquidity. The tier 1 capital ratio was 21.3% as at December 31, 2013, compared with 21.5% at year-end 2012.

Further encouraging growth in net asset inflows

Net new asset inflows totaled CHF 7.5 billion in 2013. This represents a growth of 7% of assets under management at the end of 2012. All the business sectors and regions contributed to this result, growth. At year-end, assets under management amounted to CHF 110.7 billion, compared with CHF 102.1 billion at the end of 2012.

Outlook

LGT Group has made a good start to the current year and, barring any unexpected developments in what generally remains a challenging economic environment, remains confident of generating good results.

H.S.H. Prince Max von und zu Liechtenstein, CEO LGT Group: "We achieved good results in 2013 in an environment that re-mained challenging, and we are pleased with the progress we made in our core businesses. We are held in high regard by clients and relationship managers, are strategically well placed and, thanks to our solid capital base, can take a flexible approach to investing in our services and our market presence. We remain very optimistic about LGT’s future."