Economic value creation

Information checkedInformation geprüft Economic value creation

Stability

Liechtenstein is one of only eleven countries worldwide with an AAA rating. In November 2020, the rating agency Standard & Poor's (S&P) reconfirmed its best rating for the country's creditworthiness. According to its report, Liechtenstein retained its top rating primarily on the strength of the healthy state of its public finances. It is considered a stabilising factor especially in difficult times and provides the necessary room for manoeuvre. As a result of the Covid-19 pandemic, Standard & Poor's expects Liechtenstein's economy to slow down significantly, but that its high reserves and income situation will stand it in good stead for the future.

The stable financial and banking centre with strong international connections contributes substantially to the positive position it is in. Almost a quarter of Liechtenstein's gross domestic product is generated by the financial sector.

For the LLB Group, having a very solid capital base is also part of its identity. We exceed the core capital ratio of 13 per cent required under Basel III regulations since 2019 and have done so for many years (see chapter "Finance and risk management").

The LLB share

The LLB share is a worthwhile investment. Investors have continued to profit from a sustainably attractive dividend yield for years.

Market capitalisation

The LLB share has been listed on the Swiss stock market, SIX Swiss Exchange, since 1993 under the symbol LLBN (security number: 35514757) and assigned to the "International Reporting Standard" segment. In 2020, around 1.9 million LLB shares (2019: 2.2 million) were traded on the SIX Swiss Exchange, corresponding to 6.2 per cent (2019: 7.2 %) of total shares issued. With 30.8 million registered shares issued, the market capitalisation of Liechtensteinische Landesbank AG stood at CHF 1.6 billion (2019: CHF 1.9 billion) as at 31 December 2020. The LLB share has been listed in the MSCI World Small Cap Index since 2018.

Shareholder structure

The Principality of Liechtenstein's holding of 17.7 million LLB shares, or 57.5 per cent of the share capital, remained unchanged in 2020. In 2011, the Liechtenstein Government, as the representative of the majority shareholder, adopted the ownership strategy it has been pursuing in regards to the Principality's equity stake in Liechtensteinische Landesbank AG (www.llb.li/en/investors/llb-share). It thereby explicitly supports the stock exchange listing of LLB and retains a majority stake of at least 51 per cent.

5.9 per cent of the shares were owned by the Haselsteiner Familien-Privatstiftung and the grosso Holding Gesellschaft mbH, both of which are domiciled in Austria, as at 31 December 2020 (see chapter "Corporate governance").

LLB held 0.9 per cent (2019: 1.2 %) of its own shares (treasury shares) as at the end of the reporting year. The remaining registered shares were in free float, whereby none of the other shareholders held more than 3 per cent of the share capital.

Overall 89.8 per cent of the 30.8 million total registered shares were entered in LLB AG's share register as at the end of the reporting year. 10.2 per cent, or 3'142'990 shares, were not registered.

Share price performance

2020 will go down in history as a particularly difficult year for stock markets. Bank shares also suffered significant price losses due to the coronavirus pandemic. The European banking index, for example, fell in September 2020 to its lowest level in almost thirty years. The price of the LLB share stood at CHF 52.50 as at 31 December 2020. Its total return was minus 12.4 per cent. In comparison, the SPI Swiss Banks Index lost 12.6 per cent in the year under report, while the STOXX Europe 600 Banks Index in CHF was down as much as 24.2 per cent on the previous year.

Dividend policy

Liechtensteinische Landesbank pursues an attractive, long-term-oriented dividend policy for the benefit of its shareholders. Furthermore, under the StepUp2020 strategy, the LLB Group is committed to safeguarding its financial security and stability. It intends to keep risk-bearing capital at a Tier 1 ratio of over 14 per cent in accordance with Basel III. Against this backdrop, the payout ratio for shareholders should be 40 to 60 per cent of Group net profit.

The Board of Directors will propose a stable dividend of CHF 2.20 (2019: CHF 2.20) per share at the 29th Ordinary General Meeting of Shareholders on 7 May 2021. Based on the share price as at the end of 2020, this corresponds to a dividend yield of 4.2 per cent. Total dividends to be paid out amount to CHF 67.1 million (2019: CHF 67.0 million). This represents a payout ratio of 61.1 per cent for 2020 (2019: 54.3%).

Analysts' recommendations

"The LLB share is very attractively priced. A dividend yield of 4.0 per cent for 2021 is, in our opinion, also very attractive", wrote Javier Lodeiro, the Zürcher Kantonalbank analyst responsible for monitoring the LLB share, in September 2020. He cites the LLB Group's excellent performance especially on the cost front. Further, he points out that despite allowances credit quality is high. LLB could perform well compared to Swiss asset managers, according to Lodeiro. Consequently, he reaffirmed his "overweight" rating.

Research Partners AG has been covering the LLB share since mid-2016. In a report that came out in October 2020, analyst Rainer Skierka also views the LLB as being attractively priced. Research Partners has left its buy recommendation unchanged. The twelve-month price target has been adjusted to CHF 72.00 (2019: CHF 85.00) to reflect lower estimates and changed market conditions caused by the Covid-19 pandemic.

Communication with the capital market

The LLB Group publishes annual and interim financial results (see chapter "Responsibilities for the economy, society and environment"). Normally, we hold a media and analyst conference on the annual results in Zurich. If, as in the previous year, it cannot take place physically in 2021 due to the coronavirus pandemic, there will be a conference call for analysts, investors and the media instead – like we have for the interim financial results. The LLB Group's annual report and interim financial reporting form the basis respectively. We produce these to a very high standard. Hence, the LLB Group has ranked among the companies with the best results in the overall rating category of the Swiss Annual Report Rating for several years now.

 Also at the General Meeting of Shareholders, the Board of Directors and the Board of Management report transparently on the course of business. In 2020, it had to be held for the first time without shareholders being physically present due to the coronavirus pandemic.

We also hold regular discussions with investors, provide information at roadshows and participate in specialist conferences for financial analysts and investors. In the reporting year, however, these activities had to be largely suspended as part of increased safety measures to protect against the spread of the Covid-19 virus.

All publicly accessible information about the LLB Group can be accessed on our website at www.llb.li. Anyone interested is welcome to register at www.llb.li/registration to receive price-relevant facts electronically. Additionally, we publish our information via our social media channels (Facebook, Twitter). We publish the annual and interim financial reports in a comprehensive online version with numerous additional functions. The Annual Report 2020 in German can be accessed online at gb2020.llb.li and in English at ar2020.llb.li.

The LLB share: facts and figures