Retail & Corporate Banking
Private and corporate client business
The Retail & Corporate Banking Division of the LLB Group as a universal bank encompasses the lending, deposit and payments business with private clients in Liechtenstein and Switzerland, as well as investment and asset management business with an amount up to CHF 0.5 million. As a business bank, the LLB Group is also an important partner for the business community in Liechtenstein and the east of Switzerland (see the chapter “”).
Mortgage lending business
In 2014, interest differential business was again a strong revenue generator. During 2014, mortgage loans accounted for 75.1 percent (2013: 76.4 %) of loans granted by LLB AG, corresponding to CHF 4.3 billion (2013: CHF 4.2 billion). With a market share of around 50 percent, LLB AG is the market leader in Liechtenstein.
In 2014, growth slowed at a high level. A second tax amnesty in Liechtenstein, similar to the Swiss model, induced clients to amortise their mortgages. An amendment to the banking ordinance, which came into force on 1 April 2014, had an adverse effect on mortgage business. The amended ordinance stipulates tighter lending regulations for all Liechtenstein banks. Even before the amendment, the Liechtensteinische Landesbank already pursued a conservative lending policy with respect to collateral values, own capital requirements and affordability.
Our Bank Linth subsidiary is an important partner in its regions for real estate financing. Mortgage lending business is its most important source of income. In 2014, its loans to clients increased by 4.9 percent to CHF 5.2 billion (2013: CHF 5.0 billion).
Real estate market in Liechtenstein
According to the national statistics office, in de four quarters of 2014 projected construction costs rose by 2.5 percent to CHF 435.5 million (2013: CHF 425.0 million) in Liechtenstein. At the same time, investments in residential construction fell by 5.0 percent to CHF 277.5 million (2013: CHF 292.2 million). Construction costs in the industry and services sector increased to CHF 113.1 million. Public procurement expanded by 18.7 percent to CHF 42.7 million (2013: CHF 52.5 million).
Real estate market in Switzerland
In September 2013 and January 2014, the Swiss authorities activated their anti-cyclical capital buffer (ACB) to slow activity in the mortgage and real estate market. Since 30 June 2014, banks are obliged to hold an additional 2 percent of equity capital for the mortgage loans granted for the financing of residential property in Switzerland.
According to the UBS Swiss Real Estate Bubble Index, in spite of the levelling off in mortgage growth there is still no sign of a reduction in the danger of overheating in individual areas of the mortgage and real estate market.
The LLB Group’s business areas in Switzerland cover very heterogeneous markets. There are varying trends and developments in specific areas.
The clients of the LLB Group benefit from our holistic advisory concept. We are able to convince them with a service package that includes, in particular, retirement, financial and estate planning as well as corporate and private pension provisioning. Private financial planning is a key activity, a field in which the LLB Group possesses unique, comprehensive and interlinked knowledge.
LLB Liechtenstein Pension Fund Foundation
Over the last ten years, LLB AG has established itself in the Liechtenstein market as a competence center for corporate and private pension planning and provisioning. Measured in terms of size and market share, the LLB Liechtenstein Pension Fund Foundation, as the youngest pension fund in the country, ranks as number two among the independent collective foundations in Liechtenstein. It continued its growth in 2014.
The LLB Pension Fund Foundation benefits from the extensive investment competence of the LLB Group. The Foundation’s assets are managed according to the LLB’s asset management concept.
Thanks also to the pleasing development on the stock markets, the pension fund capital of LLB Liechtenstein Pension Fund Foundation recorded growth of CHF 472 million (2013: CHF 413 million) per 31 December 2014. It provides services to 360 (2013: 345) companies with 4’275 (2013: 4’082) active insured persons. The LLB Pension Fund Foundation is one of the few pension funds that offers its members two investment strategies. The interest rate on the retirement capital with the “Conservative” strategy stood at 3.0 percent (2013: 2.5 %) in 2014, and 3.5 percent (2013: 3 .0%) with the “Dynamic” investment strategy).
In view of the demographic changes, the calculation of pension duration and pension amount is becoming more and more important. In 2014, the LLB Liechtenstein Pension Fund Foundation reduced the technical interest rate to 2.75 percent (2013: 3.0 %), and converted the old-age credit balance upon retirement at 64 into a pension at a rate of 6.9 percent (2013: 7.0 %). From 2015, this conversion rate will be reduced to 6.8 percent. Die LLB Liechtenstein Pension Fund Foundation has a very good structural ratio: for each pensioner there are 31 active insured contributors (2013: 45 insured contributors).
Since 30 October 2008, LLB Professional Pensions AG, a subsidiary of Liechtensteinische Landesbank, has managed the Swiss ALVOSO LLB Pension Fund. In 2014, 255 (2013: 249) companies with 1’455 (2013: 1’493) employees were serviced by ALVOSO. The pension fund capital amounted to CHF 220 million (2013: CHF 200 million). In its annual comparison of pension funds, the Swiss “SonntagsZeitung” ranked ALVOSO first in the category for risk and management costs, it placed second for its service quality.