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LLB Annual Report 2021 de

Letter to shareholders

Georg Wohlwend (Chairman of the Board of Directors) and Gabriel Brenna (Group CEO)

Information checkedInformation unaudited Information geprüft Information ungeprüft Growth and sustainability lead the way forward

Dear shareholders

2021 was a very positive year for the LLB Group in several respects. As planned, we completed our StepUp2020 strategy and, at the same time, we initiated a new corporate strategy, which fills us with confidence for the future. Moreover, in spite of the challenging environment, we achieved a very pleasing business result. All in all, therefore, a year that we can be proud of, and which we would like to review for you once again:

Record growth

A successful business year characterised principally by growth. We registered record new money inflows of CHF 7.2 billion, corresponding to new money growth of more than 9 per cent. In combination with the good performance of the financial markets, this translates into an increase in client assets under management of 15.4 per cent to CHF 91.9 billion. Loans to clients also rose by 4.3 per cent to CHF 13.8 billion.

For the first time, the business volume reached, and exceeded, the 100-billion mark in 2021 – a milestone in our 160-year history. At the end of the year under report, it stood at CHF 105.7 billion, 13.8 per cent above the previous year’s value.

It was especially pleasing that, once again, the LLB Group achieved new money inflows in all three market divisions and booking centres. The takeover of the private banking clients of Credit Suisse in Austria also contributed to this development. Furthermore, we opened a second business location in Austria. The new business base’s favourable strategic and geographical location in Salzburg offers great potential for additional expansion into western Austria and southern Germany.

Record result

Our robust growth was reflected in the Group’s business result. We were able to report the best business result for over ten years; at CHF 137.9 million, it was 25.5 per cent higher than in the previous year and reflected not just our dynamic growth, but also the improved quality of our earnings and our strict cost management. For instance, we posted good growth in fee and commission business. Portfolio-related business expanded particularly robustly here, enabling us to further improve the quality of our largest income drive. In the year under report, we reduced our cost/income ratio by four percentage points to 65.8 per cent.

The extremely good business result in 2021 once again testifies to the LLB Group’s ability to grow organically, sustainably and profitably.

Successful completion of StepUp2020

Indeed, we can not only draw a positive balance for the 2021 business year, but also for the entire StepUp2020 strategy period, which was extended by one year. In most cases, we substantially exceeded the goals we set at the start of the period (see chapter “Strategy and Organisation”). For example, we clearly surpassed our expectations with business volume (target 2020: CHF 70 billion), with cumulative business result (target 2020: CHF 500 million) and with the tier 1 ratio (target 2020: at least 14 %). With the cost/income ratio, where we missed out at the end of 2020 on attaining our target value of 65 per cent due to the persisting low interest rate environment, we came within 0.8 percentage points of reaching the 2021 target.

On balance, we can state that StepUp2020 was a complete success that has provided us with a very good starting point for the future. We can be proud of what the LLB Group has achieved in the last few years!

New ACT-26 corporate strategy

The end of the year and the completion of StepUp2020 represent at the same time the start of our new ACT-26 corporate strategy. ACT-26 will see us focus on the core elements of growth, efficiency and sustainability up to 2026. Our previous rate of growth is to be accelerated (ACcelerate). At the same time – using the latest technologies – we intend to become even more client focused, effective and sustainable (Transform). For this purpose, we shall invest CHF 100 million in the digital transformation of the LLB Group. Our organisation will also be aligned with the new strategy. It will become leaner and more efficient. From 2022, instead of the former six divisions we will have only five: two market and three back office support divisions.

One thing, however, esteemed shareholders, will remain unchanged: in future too, the LLB Group will stand for the highest security and stability.

First carbon-neutral bank in Liechtenstein

One of the core elements of our new strategy is sustainability. For the next five years, we have set ourselves ambitious and measurable goals in this area. Thanks to its full compensation of its greenhouse gas emissions in 2021, the bank has already become carbon-neutral – making it the first financial institute in Liechtenstein to do so. For this purpose, we are working together with the Swiss climate non-profit organisation myclimate to reduce greenhouse gases in regional and international projects. Our ambitious goal is to become completely carbon-neutral by 2040 – ten years earlier than envisaged in the Paris climate agreement. At the same time, we shall support our clients in their efforts to achieve more sustainability. Against this backdrop, we adapted our range of products in 2021. We shall add further innovative products in this context in 2022.

To underline our strong belief in, and dedication to, sustainable development we have joined several of the most important international climate initiatives such as the “Net-Zero Banking Alliance”, the “Principles for Responsible Banking” and the “Climate Pledge”.

Outstanding employer

As you can see, we have set ourselves ambitious goals with ACT-26 for the future. To achieve these objectives, above all, we require qualified and motivated employees. To this end, we are continually improving the working environment for our employees – successfully!  After being the recipient in 2020 of the “Swiss Employer Award” and the “Friendly Work Space Award”, in 2021 LLB was awarded the prize for being a “Family-friendly company” by the Liechtenstein government for its efforts to enhance the work/life balance of its employees.

Purchase offer to the shareholders of Bank Linth

As an element of the realisation of our new strategy, in January a further key decision was taken. The Liechtensteinische Landesbank made a purchase offer to the shareholders of Bank Linth. We intend to increase our share capital stake in Bank Linth LLB AG to 100 per cent and have the shares delisted from the Swiss exchange. The step will enable Bank Linth to reduce complexity and, as a retail bank, to focus even more sharply on its clients and their requirements. By submitting this purchase offer, we underline our commitment to Bank Linth and the Swiss market.

Attractive dividend policy

As shareholders, you have been able to benefit from our long-term, attractive dividend policy for many years. The Board of Directors proposes to the General Meeting of Shareholders on 6 May 2022 that the dividend be increased from CHF 2.20 to CHF 2.30. Based on the closing price of the LLB share on 31 December 2021, this corresponds to a dividend yield of 4.4 per cent.

Outlook 2022

The market environment remains challenging. Factors such as the uncertainties in the geopolitical situation - in particular due to the war in Ukraine - and the associated volatility on the financial markets, the rising danger of inflation, or the Corona pandemic pose a not inconsiderable risk to economic development in the coming months. Nevertheless, we are confident that the dynamic development of the LLB Group will continue in the coming years. We have a solid foundation and with ACT-26 we have a clear, future-oriented strategy, the implementation of which has already begun. We expect a solid result for the year 2022.

Thank you for your trust

To enable the highly successful 160-year history of our bank to be continued we rely on the loyalty of our clients, and of course, on your trust, esteemed shareholders. We want to thank you sincerely for your solidarity with the LLB Group. A note of sincere thanks also goes to our staff for their hard work and great dedication, without which it would not have been possible for us to achieve this gratifying business result.

Yours sincerely

Gabriel Brenna
Group CEO
Georg Wohlwend
Chairman of the Board of Directors