Following a subdued start to 2019 characterized by market uncertainties and low client activity, LGT reported solid, broad-based revenue growth, particularly in the second quarter. In the first half of 2019, the private banking and asset management group further invested in the expansion of its international presence and its client business. The local office opened in Bangkok in March and the agreement to acquire a majority stake in the Indian wealth manager Validus Wealth announced in June underscore LGT’s successful growth trajectory.
LGT’s total operating income increased 2% to CHF 848.2 million in the first half of 2019. Income from services decreased 1% and totaled CHF 536.1 million. This reflects the lower client activity at the beginning of the year, the smaller average asset base compared to the first half of 2018, as well as an accounting change, according to which certain transactions are now recognized under trading activities instead of services. Net interest income and credit losses remained stable at CHF 138.7 million. Due to the above-mentioned accounting change, income from trading activities and other operating income rose 16% to CHF 173.4 million.
Total operating expenses increased 4% to CHF 616.1 million in the first half of 2019. Personnel expenses rose 8% to CHF 482.2 million, mainly due to the increased headcount (+4%) resulting from ongoing investments in the client business. In contrast, business and office expenses fell 10% to CHF 133.9 million, as certain lease payments are now recognized under depreciation due to a change in the accounting standards (IFRS 16). The increase in depreciation, amortization and provisions reflects this accordingly.
The cost-income ratio was 74.0% as at the end of 2018, compared with 72.6% as at the end of June 2019. Overall, group profit totaled CHF 155.6 million for the first six months of 2019, compared with CHF 174.8 million (-11%) in the prior year period.
LGT is very well capitalized with the tier 1 capital ratio at 20.3% as at 30 June 2019, and has a high level of liquidity.
Broad-based net asset inflows
LGT once again reported strong net asset inflows in the first half of 2019 of CHF 5.8 billion, which corresponds to an annualized growth rate of 6%. All regions and both of LGT’s business areas contributed to this result with positive net asset inflows.
As at 30 June 2019, assets under management totaled CHF 215.0 billion, representing a 8% increase compared with the end of the previous year. In addition to the net asset inflows, this rise is also attributable to positive market performance.
Strategy and outlook
LGT is confident that with its internationally broad-based business and strong market position in well-diversified client markets and asset classes, it will continue to achieve further profitable growth in 2019 and will continue to invest prudently in its business.
H.S.H. Prince Max von und zu Liechtenstein, CEO LGT: “We closed the first half of 2019 with good results despite volatile market conditions. Thanks to our stability, long-term strategy and deep investment expertise, LGT continues to be a strong partner to its clients, as evidenced by our once again robust net asset inflows. In order to build out our strengths in a targeted manner, we are further investing in our market presence in Asia and in our investment competencies, with a particular focus on the expansion of our impact investing platform. With our broad client offering and our committed employees, we are very well positioned to take advantage of market opportunities and to further solidify our position as a leading private banking and asset management provider.”