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LLB Annual Report 2021 de

Strategy and organisation

Information checkedInformation unaudited Information geprüft Information ungeprüft Strategy and organisation

With 160 years of history, the LLB Group has a long tradition as the oldest bank in the Principality of Liechtenstein. A clear vision, an ambitious strategy and a value-oriented corporate culture make it a trusted partner for its clients, investors and employees.

Structure and organisation of the LLB Group

The LLB Group has a divisional organisational structure. In addition to the three market divisions “Retail and Corporate Banking”, “Private Banking” and “Institutional Clients”, the management structure includes the functions of Group Chief Executive Officer (CEO), Group Chief Financial Officer (CFO) and Group Chief Operating Officer (COO).

We have a presence in the market regions of Liechtenstein, Switzerland and Austria, with one bank each: Liechtensteinische Landesbank AG, Bank Linth LLB AG and Liechtensteinische Landesbank (Österreich) AG. The LLB Group also has two competence centres in the areas of asset management and fund services.

The three market divisions

The LLB Group’s business model is based on three profitable market divisions:

  • Personal and Corporate Clients comprises the universal banking business in the home markets of Liechtenstein and Switzerland (see chapter “Personal and Corporate Clients”).
  • Private Banking comprises investment advice, asset management and asset structuring as well as financial and pension planning services (see chapter “Private Banking”).
  • Institutional Clients comprises the intermediary and fund business as well as the Asset Management Business Area of the LLB Group (see chapter “Institutional Clients”).
Group Structure

StepUp2020 strategy

Under the StepUp2020 strategy, the strongly client-oriented LLB Group concentrated on its strengths. It focused on four core elements:

  • Growth: We wanted to achieve this in two ways. Firstly, we wanted to grow organically by building on our own strengths. To this end, we increased resources available for client advisory services. Secondly, we sought to make targeted acquisitions in our home markets of Liechtenstein, Switzerland and Austria.
  • Profitability: We sought to increase our margins by offering outstanding products and services. Efficient market penetration helped to generate profitable income. Maintaining strict cost management was key.
  • Innovation: We invested in the future in a targeted manner. On the one hand, we developed pioneering digital solutions and, on the other, we also provided our clients with an optimised and personalised service. We automated standard business and individualised trust-based business. The investment volume amounted to CHF 100 million over the last five years, of which CHF 30 million were channelled into digital solutions for our clients.
  • Excellence: We continually improved processes throughout the organisation using lean management principles. Our aim was to increase the benefit to clients and boost added value. Given increasing regulation, we strove to maintain strict compliance standards.

Growth and financial targets

Under the StepUp2020 strategy, the LLB Group had set itself four clear and measurable targets:

  • a business volume of more than CHF 70 billion;
  • a Cost Income Ratio of under 65 per cent;
  • a Tier 1 ratio of over 14 per cent;
  • a cumulative Group net profit of more than CHF 500 million.

StepUp2020 can be summed up as successful

In 2016, we initiated a phase of sustainable, profitable growth under the StepUp2020 strategy. The evaluation of the financial targets shows that this was achieved:

After years of refocusing and client outflows, returning to profitable and risk-conscious growth was the number one priority for us. At the end of the strategy period of StepUp20201, the business volume of the LLB Group was 64 per cent or around CHF 36 billion higher than it had been at the beginning. In the first half of 2021, it even exceeded the historic CHF 100 billion mark. At the end of the reporting year, the business volume stood at almost CHF 106 billion.

1In response to the uncertainty caused by the coronavirus pandemic, the StepUp2020 strategy period was extended by one year to the end of 2021. Stock, however, will still be taken of the financial targets as at 31 December 2020.

Development of business volume in CHF billion

We have seen very strong organic growth in all areas, especially since 2019. We were also able to make three acquisitions in line with our strategy – worth over CHF 25 billion – in our home markets of Switzerland and Austria.

The growth generated was also very profitable. Under StepUp2020, average annual Group net profit was CHF 107 million or 50 per cent higher than in the previous Focus2015 strategy period. This is all the more impressive given the low or negative interest rates in all of the main currencies of the LLB Group.

The Tier 1 ratio target of at least 14 per cent was also clearly exceeded, despite having made three acquisitions. This provides scope for further acquisitive growth in the future.

Only the target we set ourselves for the Cost Income Ratio of a maximum of 65 per cent was not quite achieved. The main reason for this was the low and negative interest rate development in all of the main currencies of the LLB Group. Contrary to our original expectations, the situation on the interest rate front has not eased but become more acute still. During the last two years of the strategy period, we consequently increasingly focused on expenditure control and efficiency gains within the organisation. At the same time, however, it was important to continue investing in the future, especially in the area of innovation and digitalisation, so as to still generate income and remain competitive. In the reporting year, we fell just 0.8 per cent short of the target we had set for ourselves.

Overall, in terms of the financial targets under StepUp2020, we can draw a very positive balance: the strategy has been a success. After years of refocusing and client outflows, the LLB Group is on a sustainable, profitable growth path and has been since 2016. We are an innovative and efficient competitor in a competitive market.

Key aspects of StepUp2020 will therefore also be incorporated into the new follow-up ACT-26 strategy (see chapter “ACT-26”).

Corporate culture

Vision and guiding principles

Besides strategy and structure, the culture of a company is one of the most important factors in its success. The LLB Group is committed to a concept of banking with a binding system of values. Our vision is thus encapsulated in the motto:

“We set standards for banking with values."

Our vision of banking is based on the idea of managing material values with a clearly defined value system. The guiding principles derived from this are based on four binding values:

  • integrity – We create clarity and stand by our word.
  • respectfulness – We believe in partnership and hold both clients and colleagues in high esteem.
  • excellence – We set standards through performance and passion.
  • pioneering – We play an active role in creating a sustainable future.

We take various measures to ensure that our vision and guiding principles are firmly established in the minds of the employees and managers (see chapter “Values and corporate management”).