Consolidated interim management report (unaudited)
Information checkedInformation unaudited Information geprüft Information ungeprüft Consolidated interim management report
In the first half of 2021, the LLB Group earned a net profit of CHF 71.1 million, a Group business result that was substantially higher than in the equivalent period in the previous year (first half of 2020: CHF 60.2 million). The record business volume, the improved earnings quality in client business and the positive development with risk provisioning all contributed to the gratifying result. Operating expenses increased in comparison with the previous year, largely as a result of one-time effects. Adjusted for these effects, operating expenses were slightly lower than in the previous year.
The profit attributable to the shareholders of Liechtensteinische Landesbank AG amounted to CHF 67.1 million (first half of 2020: CHF 57.1 million). Earnings per share stood at CHF 2.20 (first half of 2020: CHF 1.87).
Operating income rose in the first half of 2021 by 10.2 per cent to CHF 231.8 million (first half of 2020: CHF 210.4 million).
In comparison with the previous year, interest income before expected credit losses decreased by 2.8 per cent or CHF 2.2 million to CHF 76.6 million (first half of 2020: CHF 78.8 million). Income from interest business with clients rose slightly. The pressure on margins in mortgage lending business continues to be high. Thanks to targeted growth with mortgage loans, lower refinancing costs and the implementation of negative interest rates, this trend was to some extent compensated for. In contrast, income from interest business with banks was marginally lower, particularly on account of lower USD interest rates.
Whereas, on account of higher risk provisioning, allowances for expected credit losses of CHF 13.8 million were allocated in the first half of 2020, provisions of CHF 1.0 million were released in favour of the income statement in the first half of 2021.
In comparison with the previous year, net fee and commission income climbed to CHF 108.6 million (first half of 2020: CHF 99.4 million). Portfolio-dependent revenues increased largely on account of the substantially higher volume of client assets and much higher earnings with LLB Invest advisory mandates. The proportion of income dependent on transactions remained stable in spite of the exceptional level of trading activity during the first half of the previous year.
Net trading income stood at CHF 37.6 million in the first half of 2021(first half of 2020: CHF 46.5 million). In the previous year, trading in foreign exchange, foreign notes and precious metals had benefitted especially from the high volume of trading activity and at times posted record turnover. As was expected, in the first half of 2021 income was 15.4 per cent lower than in the previous year and stood at CHF 32.4 million. Accordingly, foreign exchange business was CHF 6.0 million or 16.1 per cent lower than in the previous year. The valuation gains on the reporting date with interest rate hedging instruments amounted to CHF 5.2 million (first half of 2020: CHF 8.2 million).
Income from financial investments totalled CHF 5.0 million (first half of 2020: minus CHF 1.9 million). The positive development on the financial markets led to book gains, measured on the reporting date, of CHF 1.2 million. In the equivalent period of the previous year this position had posted a loss of CHF 3.7 million. Revenues from dividends grew to CHF 3.4 million (first half of 2020: CHF 2.2 million).
Other income rose by CHF 1.7 million to CHF 3.1 million in comparison with the previous year. This was mainly attributable to changes in the value of book gains with investment property.
Operating income (in CHF millions)
At CHF 150.7 million, operating expenses in the first half of 2021 were 5.3 per cent higher than in the previous year (first half of 2020: CHF 143.1 million).
Personnel expenses rose by 5.3 per cent or CHF 4.8 million to CHF 94.0 million (first half of 2020: CHF 89.2 million). This was mainly the result of the adjustment of the conversion rate of the LLB's pension fund in the equivalent period of the previous year. Adjusted for this one-time effect, personnel expenses were CHF 1.9 million lower than in the previous year. On the one hand this was due to synergies being exploited in operational functions, and on the other, to a more efficient distribution organisation.
At CHF 37.6 million, general and administrative expenses were 14.3 per cent up on the previous year (first half of 2020: CHF 32.9 million). This interim result includes a settlement payment in a legal case of CHF 2.7 million, whereas in the previous year net provisions for legal and litigation risks totalling CHF 3.8 million were released. Adjusted for these two effects, general and administrative expenses were CHF 1.8 million lower than in the previous year.
Depreciation and amortisation decreased to CHF 19.1 million (first half of 2020: CHF 21.1 million).
The Cost Income Ratio remained constant at 65.1 per cent (first half of 2020: 65.5 %). Without the market effects, i.e. without income from interest rate swaps and price gains from financial investments, the Cost Income Ratio stood at 67.1 per cent (first half of 2020: 66.7 %).
In comparison with 31 December 2020, the consolidated balance sheet total increased by 5.3 per cent and amounted to CHF 24.8 billion as at 30 June 2021 (31.12.2020: CHF 23.6 billion).
Equity attributable to the shareholders of LLB stood at CHF 2.0 billion as at 30 June 2021. The tier 1 ratio amounted to 20.8 per cent (31.12.2020: 21.6 %). The return on equity attributable to the shareholders of LLB amounted to 6.6 per cent (first half of 2020: 5.9 %).
In the first half of 2021 the LLB Group achieved a net new money inflow of CHF 2'748 million (first half of 2020: CHF 1'028 million). Thanks to intensive efforts and sales in the markets, positive new money inflows were attained in all three market segments and all booking centres.
In comparison with 31 December 2020, the business volume expanded by 9.7 per cent or CHF 9.0 billion to a new record of CHF 101.9 billion.
Client assets under management rose by 10.9 per cent to CHF 88.3 billion (31.12.2020: CHF 79.7 billion).
In comparison with 31 December 2020, loans to customers grew by 2.2 per cent to CHF 13.5 billion (31.12.2020: CHF 13.2 billion). Mortgage loans climbed by 2.0 per cent to CHF 12.0 billion.
Business volume (in CHF billions)
In spite of the challenging environment, the LLB Group views the future with optimism. The LLB Group expects to achieve a solid business result for the full 2021 business year. Thanks to its focused business model, ambitious growth targets and its ability to overcome difficult circumstances, the LLB Group has put in place the essentials to enable it to develop successfully.