In a challenging market environment, the international private banking and asset management company LGT Group increased group profit for the first six months of 2012 by a substantial 58% to CHF 130 million as against the same period of the previous year. Net asset inflows totaled CHF 5.5 billion, which equates to an annualized growth rate of 13%.
The first six months of the current year were shaped by a difficult economic environment and the debt crisis in Europe. The associated global slump in growth also moved investors to caution. Nevertheless, LGT Group made substantial progress. The group profit of CHF 130 million, which is 58% higher than in the same period of the previous year, is attributable both to increased income and to maintaining disciplined cost management. Total operating income increased by 14% to CHF 466 million. All income components were contributing factors, with interest income up by 26% and income from services by 5%. Thanks to gains on securities, income from trading activities and other operating income grew by 30%. Total operating expenses increased by 4% to CHF 302 million compared to the same period of the previous year. Despite ongoing investments in the business expansion, business and office expenses decreased by 10% as a result of a heightened awareness of costs. The 9% increase in personnel expenses is attributable to higher long-term compensation elements on the back of the healthy business performance. The cost-income ratio improved from 75% to 65%.
LGT Group has a very healthy balance sheet, a good liquidity profile, and solid capitalization. The group’s Tier 1 capital ratio increased from 17.5% as of December 31, 2011, to 20.2% as of June 30, 2012, and is very high by international standards. LGT Group has no outstanding debts from the “PIIGS” countries (Portugal, Italy, Ireland, Greece, Spain) on its balance sheet.
Net new assets develop positively
At CHF 5.5 billion, or an annualized growth rate of 13% of the assets under management, net asset inflows continued their very pleasing trend during the first six months of 2012. All of the group’s business areas and booking centers showed strong net inflows during the first six months of the year. Since the end of 2011, assets under management have increased by CHF 7.8 billion (9.0%) to CHF 94.7 billion.
Growth strategy on course
LGT’s clear growth strategy, which is oriented toward the long term, is highly valued by investors and offers an attractive platform for successful relationship managers. In particular, the Group’s Asian business has performed excellently. On the back of a strong presence in Hong Kong and Singapore, LGT has generated double-digit rates of asset growth over the past few years in its business with local clients.
LGT completed the purchase of the insurance-linked investments boutique of Clariden Leu AG during the first half of the year. During the second half, LGT intends to establish a subsidiary in Dubai in order to make its innovative investment solutions more accessible to new client groups in the Middle East. In addition, its strong mar-ket position in Austria is to be further expanded with a new branch in Salzburg.
LGT remains cautious with respect to the further development of the market and economic environments. How-ever, with its internationally diversified business activities, LGT believes itself to be very well placed for the future.
H.S.H. Prince Max von und zu Liechtenstein, CEO of LGT Group, says, "We are very pleased with the business development during the first six months of the year. In Private Banking, we have operated very successfully in our German-speaking core markets as well as in Asia and other growth markets. In Asset Management, our good long-term investment performance has led to significant inflows. We will continue to invest in the expansion of these areas of the business in the next few years. As an owner-managed private bank, we enjoy a unique position. The stability that this brings is generating a great deal of interest in the market. With our well-established offering in Private Banking and Asset Management, we are a reliable partner for our clients, even in a difficult economic environment."