Commentary on business development
Group financial statement
Prepared in accordance with International Financial Reporting Standards (IFRS), the LLB Group’s consolidated financial statement shows a net profit attributable to the shareholders of LLB of CHF 59.8 million (equivalent period in the previous year: CHF 32.5 million). This corresponds to an increase of 84.1 percent. On 30 June 2012, the Cost-Income-Ratio stood at 57.8 percent (previous year: 75.3 %). Earnings per share rose by 84.5 percent to CHF 2.10 (previous year: CHF 1.14).
Assets under management
Client assets increased by 1.2 percent to CHF 48.7 billion (31 December 2011: CHF 48.1 billion). Assets in own-managed funds climbed by 4.2 percent to CHF 3.7 billion, while assets with discretionary mandates fell by 3.2 percent to CHF 7.3 billion. Other assets under management amounted to CHF 37.7 billion per 30 June 2012 (31 December 2011: CHF 37.0 billion). During the first six months of 2012, the LLB Group attained a net new money inflow of CHF 2 million (previous year: an inflow of CHF 529 million).
Operating income rose in the first half of 2012 by 13.9 percent to CHF 233.8 million (previous year: CHF 205.4 million). Net interest income increased by 7.0 percent to CHF 98.5 million (previous year: CHF 92.1 million). This was largely due to a 17.7-percent reduction in the amount of interest paid. Net fee and commission income fell by 4.1 percent to CHF 103.1 million (previous year: CHF 107.6 million). Brokerage fees decreased by 14.1 percent, this was partly compensated by lower brokerage expenses which were down by 16.4 percent. At CHF 5.1 million, net trading income increased by 3.3 percent compared with the figure in the previous year (CHF 4.9 million). The costs of hedging interest rate risks were higher compared with the previous year, but they were more than offset by higher earnings, particularly from client trading in foreign exchange.
Net income from financial investments expanded significantly in the first half of 2012 in comparison with the same period in 2011 to CHF 22.1 million (previous year: minus CHF 6.3 million) and made a major contribution to net profit per 30 June 2012. This is attributable to the positive price development of the financial investments during the first half of 2012. Other income stood at CHF 5.1 million on 30 June 2012 (previous year: CHF 8.0 million).
Operating expenses decreased by 2.0 percent to CHF 164.1 (previous year: CHF 167.4 million). Personnel expenses fell to CHF 75.0 million, 19.9 percent lower than in the previous year (CHF 93.6 million), which also contributed substantially to the LLB Group’s net profit in the first half year. On account of the change over made by the Personnel Pension Fund Foundation of Liechtensteinische Landesbank AG from a defined benefit to a defined contribution plan, the cash value of the benefit obligation decreased by CHF 19.8 million. This actuarial, one-time effect was recognized as a reduction in personnel expenses in the 2012 interim financial statement in conformance with IAS 19. With the change over to the IAS 19 revised standard from 1 January 2013, pension fund expenses will rise by around CHF 3 million per annum. During the first six months of 2012, the item «Salaries» was reduced by 2.6 percent to CHF 74.0 million (previous year: CHF 75.9 million). General and administrative expenses at CHF 42.5 million were slightly below the previous year’s level (CHF 42.7 million). Allowances to credit risks amounting to CHF 26.8 million (previous year: CHF 11.1 million) had a negative impact on the interim business result. Adjusted to take into account part-timers, at the end of June 2012 the LLB Group employed 1'120 persons (31 December 2011: 1'123 persons).
As per 30 June 2012, the consolidated balance sheet total increased by 2.6 percent compared with the end of 2011 to CHF 21.7 billion (31 December 2011: CHF 21.1 billion). Equity attributable to LLB shareholders stood at CHF 1.6 billion at 30 June 2012. The tier 1 ratio amounted to 13.6 percent (31 December 2011: 13.9 %) and the return on equity attributable to LLB shareholders stood at 7.7 percent (previous year: 4.0 %).