Consolidated management report
Information checkedInformation unaudited Information geprüft Information ungeprüft Consolidated management report
Thanks to continuing dynamic growth, improved quality of earnings and strict cost discipline, in the 2021 business year the LLB Group achieved its best business result for over ten years, reporting a Group net profit of CHF 137.9 million. This is 25.5 per cent higher than in the previous year (2020: CHF 109.8 million).
The net profit attributable to the shareholders of Liechtensteinische Landesbank AG amounted to CHF 129.9 million (2020: CHF 103.5 million). Undiluted earnings per share stood at CHF 4.25 (2020: CHF 3.39).
Operating income in the 2021 business year rose by 10.7 per cent to CHF 476.4 million (2020: CHF 430.3 million).
Interest income remained virtually unchanged at CHF 154.0 million (2020: CHF 154.1 million). Income from business with clients benefitted from targeted growth with mortgage lending business, lower refinancing costs and an expansion of negative interest rates. This enabled the persisting pressure on margins, as well as the extension of fixed interest loans at lower conditions, to be compensated for. In other interest business, the LLB Group posted a fall, especially in interest income from debt instruments, due to the persisting low level of interest rates.
In the case of allowances for expected credit losses, successful recoveries in the 2021 business year led to a net release of provisions totalling CHF 2.5 million. In the previous year, on account of the corona pandemic, provisions amounting to net CHF 11.6 million were allocated for expected credit losses. After expected credit losses, interest income at CHF 156.5 million was therefore 9.9 per cent higher than in the previous year (2020: CHF 142.5 million).
At CHF 233.6 million and an increase of 17.3 per cent, net fee and commission income significantly exceeded the previous year’s result (2020: CHF 199.1 million). Higher volumes of client assets and larger margins led to a significant increase in portfolio-dependent revenues. Higher performance fees and increased earnings from investment funds were major contributors to this success.
Net trading income in the 2021 business year stood at CHF 79.0 million (2020: CHF 84.3 million). Trading in foreign exchange, foreign notes and precious metals fell year on year by 1.8 per cent to CHF 69.5 million. The valuation gains on interest rate hedging instruments, measured on the reporting date, amounted to CHF 9.4 million (2020: CHF 13.5 million).
Income from financial investments reached CHF 3.7 million (2020: minus CHF 0.6 million). Earnings from dividends posted a positive development at CHF 3.5 million (2020: CHF 2.4 million). Turbulence on the markets had caused book losses, measured on the reporting date, of CHF 2.9 million in the previous year. In the 2021 business year a small gain of CHF 0.2 million was attained.
Other income fell year on year by CHF 1.4 million to CHF 3.6 million (2020: CHF 5.0 million). The decrease was largely attributable to a one-time profit in the previous year from the sale of properties.
Operating income (in CHF millions)
Operating expenses in the 2021 business year stood at CHF 313.0 million, 2.1 per cent higher than in the previous year (2020: CHF 306.7 million).
Personnel expenses increased by 4.9 per cent, or CHF 9.0 million, to CHF 190.0 million (2020: CHF 181.0 million). An important reason for the increase was the adjustment of the conversion rate of the LLB pension fund, which in accordance with IAS 19 led to a credit in favour of the income statement in the previous year. In addition, personnel expenses rose due to the strategic takeover of client advisors.
General and administrative expenses at CHF 83.4 million were unchanged compared with the previous year (2020: CHF 83.4 million). The reported business result includes a settlement payment in a legal case of CHF 2.7 million. In addition, net provisions of CHF 1.0 million (2020: release of CHF 2.0 million) were set aside for legal and litigation risks. In contrast, IT costs were lower.
Depreciation and amortisation fell by 6.4 per cent to CHF 39.6 million (2020: CHF 42.3 million).
The Cost Income Ratio improved to 65.8 per cent (2020: 69.8 %).
In comparison with 31 December 2020, the consolidated balance sheet total expanded by 6.6 per cent and stood at CHF 25.1 billion on 31 December 2021 (31.12.2020: CHF 23.6 billion).
Equity attributable to the shareholders of LLB amounted to CHF 2.1 billion on 31 December 2021 (31.12.2020: CHF 2.0 billion). The tier 1 ratio stood at 20.3 per cent (31.12.2020: 21.6 %). The return on equity attributable to shareholders of LLB amounted to 6.3 per cent (2020: 5.3 %).
At 31 December 2021, the LLB Group achieved a new record business volume of CHF 105.7 billion (31.12.2020: CHF 92.9 billion) and therefore continued its dynamic growth.
In the 2021 business year, the LLB Group registered a net new money inflow of CHF 7'212 million (2020: CHF 3'274 million). At 9.1 per cent, this represents the highest inflow since the introduction of this indicator. All market divisions and booking centers were able to contribute to net new money growth. LLB Österreich’s referral agreement with Credit Suisse also had a positive impact of CHF 0.8 billion on net new money inflow.
Combined with the good performance of the financial markets this led to an increase in client assets under management of 15.4 per cent to CHF 91.9 billion (31.12.2020: CHF 79.7 billion).
Loans to clients climbed by 4.3 per cent to CHF 13.8 billion in comparison with 31 December 2020 (31.12.2020: CHF 13.2 billion). Mortgage loans expanded by 4.3 per cent to CHF 12.2 billion (31.12.2020: CHF 11.7 billion).
Business volume (in CHF billion)
The market environment remains challenging. Factors such as the Corona pandemic, the rising danger of inflation or uncertainties in the political situation pose a not inconsiderable risk to economic development in the coming months. Nevertheless, the LLB Group views the future with confidence and expects its dynamic development to continue over the next few years. It stands on a solid foundation and, with the new ACT-26 strategy, has a clear, forward-looking strategy whose implementation has already begun. For the year 2022, the LLB Group expects a solid result.