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LGT achieves higher earnings and an increase in profits for the first half of 2014

August 27, 2014

LGT made solid headway both strategically and operationally in the first half of 2014. Total group profit rose 19% to CHF 102.8 million. Assets under management rose by 5% since the end of 2013 to CHF 116.2 billion. Net asset inflows totaled CHF 2.3 billion (corresponding to an annualized growth rate of 4.2%).

With a tier 1 capital ratio of 20.7%, LGT is very well capitalized. The acquisition of a select private banking portfolio from HSBC in Switzerland announced in June 2014 is proceeding according to schedule. The transaction is expected to be concluded in the fourth quarter of 2014. LGT is optimistic in its outlook for the further development of its business for the remainder of the year.

LGT made solid headway both strategically and operationally in the first half of 2014. Total operating income was up 8% to CHF 475.5 million, whereby net interest income contributed CHF 42.9 million (+10%), commission and service fee income CHF 326.1 million (+2%), and trading and other income CHF 106.5 million (+29%). Total operating expenses rose 7% to CHF 337.4 million during the period under review. Business and office expenses increased 4% to CHF 76.8 million. Personnel expenses rose by 8% to CHF 260.6 million, resulting from recruitment carried out in recent years as well as from increased performance-related compensation in accordance with the growth of the business. The cost-income ratio decreased by 6 percentage points to 71% compared to the business year 2013.

Depreciation, amortization and provisions totaled CHF 20.5 million during the period under review. The 27% decrease primarily reflects LGT Bank (Switzerland) Ltd.’s share of the upfront payment made by the Swiss banks under the withholding tax agreement with the United Kingdom in the first half of 2013. LGT’s group profit rose by 19% in the first half of 2014 to CHF 102.8 million compared to CHF 86.3 million in the first half of 2013. LGT is very well capitalized and has a high level of liquidity. Its tier 1 ratio was 20.7% as per 30 June, 2014, compared to 21.3% at the end of 2013.

Further increase of assets under management

In the first half of 2014, LGT recorded CHF 2.3 billion in net asset inflows, which corresponds to an annualized growth rate of 4.2%. Positive inflows from all regions and both of the company’s business areas contributed to the group’s net new money development. Assets under management rose 5% from CHF 110.7 billion at year-end 2013 to CHF 116.2 billion as at 30 June, 2014.

Outlook

LGT has gotten off to a good start for the second half of 2014 and is optimistic in its outlook for the remainder of the year. The acquisition of a select private banking portfolio from HSBC Private Bank (Switzerland) announced in June 2014 comprising approximately CHF 10 billion in assets under management is proceeding according to schedule. In addition to wealthy clients in various growth regions, LGT will also be taking over the teams that service them, which total approximately 70 employees. After conclusion of the transaction, which is expected to take place in the fourth quarter of 2014, the acquired business will be fully integrated into LGT Bank (Switzerland). With future assets under management of over CHF 30 billion, the transaction will significantly strengthen the market position of LGT Bank (Switzerland). LGT group’s assets under management will rise to over CHF 125 billion and the number of employees to approximately 2,000.    

H.S.H. Prince Max von und zu Liechtenstein, CEO of LGT: "We have made solid headway in the first half of 2014, both in terms of our results as well as in the implementation of our strategy. The acquisition of the attractive private banking portfolio from HSBC in particular will help us to significantly raise our profile in key markets. We will continue to make targeted growth investments in the future and will seek to bring further good teams onboard. Thanks to our solid capitalization, our stable ownership structure and our prudent, long-term strategy, we have an excellent basis for achieving this."