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 2022 business year the LLB Group achieved its best business result for over ten years, reporting a Group net profit of CHF 149.4 million. This is 8.4 per cent higher than in the previous year (2021: CHF 137.9 million).
The net profit attributable to the shareholders of Liechtensteinische Landesbank AG amounted to CHF 147.5 million (2021: CHF 129.9 million). Undiluted earnings per share stood at CHF 4.82 (2021: CHF 4.25).
Operating income in the 2022 business year rose by 5.6 per cent to CHF 503.2 million (2021: CHF 476.4 million).
Interest income fell by 1.1 per cent to CHF 152.2 million (2021: CHF 154.0 million). As a result of the development of market interest rates coupled with interest adjustments to client deposits, interest expense on deposits increased. Accordingly, income from interest business with clients decreased in spite of targeted growth with mortgage lending business. In other interest business, thanks to the interest rate environment, the LLB Group increased earnings, especially from interest income from interest rate derivatives and debt instruments.
In the case of allowances for expected credit losses, recovery measures in the 2022 business year led to a net allocation of provisions amounting to CHF 2.7 million (2021: net release of CHF 2.5 million). After expected credit losses, interest income at CHF 149.5 million was 4.4 per cent down on the previous year (2021: CHF 156.5 million).
At CHF 210.9 million, net fee and commission income was 9.7 per cent under the very strong previous year’s result (2021: CHF 233.6 million). As a result of the negative situation on the financial markets, portfolio-dependent revenues declined. In addition, the income generated by higher performance-dependent fees in the previous year did not materialise in the year under report.
Net trading income in the 2022 business year stood at CHF 136.1 million (2021: CHF 79.0 million). Trading in foreign exchange made an especially substantial contribution to this result, reaching CHF 129.3 million, CHF 61.0 million above the previous year’s figure. This increase was driven by the positive development of USD interest rates. To benefit from the best investment opportunities, swap transactions were initiated as part of treasury activities. Income from client trading also developed positively. The valuation gains on interest rate hedging instruments, measured on the reporting date, amounted to CHF 5.0 million (2021: CHF 9.4 million).
Income from financial investments stood at minus CHF 0.9 million (2021: CHF 3.7 million). Earnings from dividends improved to CHF 6.3 million (2021: CHF 3.5 million). The situation on the financial markets caused book losses, measured on the reporting date, of minus CHF 7.2 million (2021: CHF 0.2 million).
Other income rose year on year by CHF 3.9 million to CHF 7.5 million (2021: CHF 3.6 million). The increase was largely attributable to the sale of an already value-adjusted receivable.
Operating income (in CHF millions)
Operating expenses in the 2022 business year stood at CHF 328.2 million, 4.9 per cent higher than in the previous year (2021: CHF 313.0 million).
Personnel expenses climbed by 3.2 per cent, or CHF 6.2 million, to CHF 196.1 million (2021: CHF 190.0 million). The increase was due to a selective expansion of personnel by around 60 full-time equivalent positions, particularly in the business areas of “Digital Transformation”. General and administrative expenses at CHF 96.0 million were up 15.1 per cent, or CHF 12.6 million, on the previous year (2021: CHF 83.4 million). The increase in both personnel and general and administrative expenses was expected and reflects the investments in implementing the ACT-26 strategy. Depreciation and amortisation fell by 8.8 per cent to CHF 36.1 million (2021: CHF 39.6 million).
The Cost Income Ratio improved to 64.0 per cent (2021: 65.8 %).
In comparison with 31 December 2021, the consolidated balance sheet total expanded by 0.3 per cent and stood at CHF 25.2 billion on 31 December 2022 (31.12.2021: CHF 25.1 billion).
Equity attributable to the shareholders of LLB amounted to CHF 2.0 billion on 31 December 2022 (31.12.2021: CHF 2.1 billion). The decrease is largely attributable to the valuation of financial investments on the reporting date. The tier 1 ratio stood at 19.7 per cent (31.12.2021: 20.3 %). The return on equity attributable to shareholders of LLB amounted to 7.2 per cent (2021: 6.3 %).
In the 2022 business year, the LLB Group registered a net new money inflow of CHF 3'609 million (2021: CHF 7'212 million). All market divisions and booking centers contributed to this positive new money growth.
At CHF 83.9 billion, client assets under management were 8.7 per cent below the previous year’s level due to the situation on the financial markets (31.12.2021: CHF 91.9 billion).
Loans to clients rose by 4.6 per cent to CHF 14.4 billion (31.12.2021: CHF 13.8 billion). Mortgage loans expanded by 5.2 per cent above the market growth rate. They increased to CHF 12.9 billion (31.12.2021: CHF 12.2 billion).
Thanks to robust organic growth, the fall in business volume of 6.9 per cent to CHF 98.4 billion (31.12.2021: CHF 105.7 billion) due to market factors was cushioned to a major extent.
Business volume (in CHF billion)
An exceptional amount of uncertainty clouds economic and business prospects. Russia’s war against Ukraine continues bringing yet more potential for economic disruption. Persisting inflation and disorderly adjustments on the global financial markets in reaction to the new interest rate environment continue to represent risk factors. Thanks to an effective mix of cost discipline, targeted investments in digitalisation and a rigorous implementation of the ACT-26 strategy, the LLB Group is confident of remaining on a robust and sustainable path to growth in 2023. It expects to achieve a solid result for the business year.