In the 2019 business year, the LLB Group earned a net profit after taxes of CHF 123.4 million (2018: CHF 85.1 million), 44.9 per cent or CHF 38.3 million higher than in the previous year. The increase was attributable to operative progress, as well as market and one-off effects. Whereas the persisting low level of interest rates had an adverse effect, fee and commission business, the stock market development and the writing back of provisions contributed positively to the Group business result. In 2019, the two companies acquired in 2018, LB (Swiss) Investment AG and Semper Constantia Privatbank AG, were included for the first time in a complete annual financial statement.
The net profit attributable to the shareholders of Liechtensteinische Landesbank AG amounted to CHF 115.3 million (2018: CHF 78.0 million). Earnings per share stood at CHF 3.77 (2018: CHF 2.62). Operating income improved in 2019 by 13.3 per cent to CHF 452.7 million (2018: CHF 399.7 million).
Interest income before expected credit losses was down in comparison with the previous year by 4.3 per cent, or CHF 6.7 million to CHF 151.3 million (2018: CHF 158.0 million). Income from interest business with clients decreased. Selective, risk-conscious growth in mortgage lending business and lower refinancing costs were unable to compensate completely for the expected decline in earnings due to the extension of fixed interest loans at lower conditions and higher interest paid on foreign currency funds. Other income from interest business, at CHF 2.5 million, was at the same level as in the previous year (2018: CHF 2.8 million).
In the 2019 business year, the LLB Group was able to credit the income statement with a net amount of CHF 1.0 million (2018: CHF 7.1 million) for the release of allowances for expected credit loss.
Net fee and commission income rose by 19.3 per cent, or CHF 33.9 million, to CHF 209.2 million (2018: CHF 175.3 million). The increase was attributable to intensive market cultivation, for example, with our new “LLB Invest” products, as well as the contribution to earnings made by LB(Swiss)Investment AG and Semper Constantia Privatbank AG, the companies acquired in 2018. Net fee and commission income was also boosted by higher volume-related fees on assets under management. Moreover, the LLB Group benefited from substantially higher performance-related earnings thanks to the good stock market year. At CHF 34.8 million, net brokerage remained at the same level as in the previous year.
Net trading income in the 2019 business year stood at CHF 78.9 million (2018: CHF 73.8 million). Trading in foreign exchange, foreign notes and precious metals rose substantially in comparison with the previous year by 5.4 per cent to CHF 67.8 million. This was attributable mainly to the contributions to earnings made by the acquisitions. The valuation gains on the reporting date made on interest rate hedging instruments amounted to CHF 11.1 million (2018: CHF 9.4 million).
Income from financial investments of CHF 4.0 million (2018: minus CHF 19.4 million) made a positive contribution to the business result. The stock market development as well as lower USD and EUR interest rates led to valuation gains of CHF 2.6 million on the reporting date with financial investments measured at fair value. In the previous year, the same effects caused a loss of CHF 20.3 million. Income from dividends also developed positively.
In comparison with the previous year other income grew by CHF 3.5 million to CHF 8.4 million. This was largely attributable to changes in the value of purchase price obligations from the acquisitions.
Operating expenses climbed in 2019 in line with strategy by 1.8 per cent to CHF 311.3 million (2018: CHF 305.9 million).
Personnel expenses of CHF 192.9 million were up compared with the previous year by 5.7 per cent or CHF 10.4 million (2018: CHF 182.4 million). The increase was largely due to the two company acquisitions made in 2018.
General and administrative expenses fell by 15.7 per cent or CHF 14.2 million to CHF 76.5 million (2018: CHF 90.8 million). The previous year’s figures included integration costs totalling CHF 14.8 million. Furthermore, in 2019 provisions for legal and litigations risks amounting to net CHF 4.7 million were released.
Depreciation and amortisation increased to CHF 41.9 million (2018: CHF 32.7 million). The increase was largely due to the two acquisitions and to the introduction of IFRS 16 “Leases”.
The Cost-Income-Ratio improved to 70.0 per cent (2018: 77.7 %). Without market effects, i. e. without income from interest rate swaps and price gains from financial investments, the Cost-Income-Ratio would have been 72.1 per cent (2018: 75.5 %).