Consolidated management report

Information unaudited Information ungeprüft Consolidated management report

Income statement

In the 2023 business year, the LLB Group earned a net profit of CHF 164.7 million, a Group business result that was 10.2 per cent higher than in the previous year (2022: CHF 149.4 million). Undiluted earnings per share stood at CHF 5.37 (2022: CHF 4.82).

Operating income in 2023 rose by 7.7 per cent to CHF 541.8 million (2022: CHF 503.2 million).

Net interest income before expected credit losses rose by 8.0 per cent or CHF 12.1 million year-on-year to CHF 164.4 million (2022: CHF 152.2 million). Interest income increased by 89.6 per cent to CHF 458.4 million (2022: CHF 241.8 million). In addition to the generally higher interest rate level, the LLB Group benefited from its risk-conscious growth. It also generated additional income in balance sheet management. The rise in interest rates is also reflected in higher interest on investments with central banks. Thanks to the rise in interest rates, the LLB Group can once again offer its clients attractive investment opportunities in fixed-term deposits and savings deposits, which is reflected in the interest expense of CHF 294.0 million (2022: CHF 89.5 million).

Risk provisions for expected credit loss in the 2023 business year amounted to net CHF 0.2 million (2022: CHF 2.7 million net allocation).

In comparison with the previous year, net fee and commission income fell by CHF 10.9 million to CHF 200.0 million (2022: CHF 210.9 million). The effects of the interest rate turnaround are also noticeable here. In the previous year, exceptionally high income was generated in the property business in Austria. Interest-bearing investments have become more attractive again due to the rise in interest rates. This has led to a noticeable reduction in trading activity on the part of customers, resulting in lower brokerage income.

Portfolio-related fees remained stable at CHF 143.1 million (2022: CHF 143.9 million) despite the positive development of performance related fees. The average custody account volume was lower overall than in the previous year. The volume only recovered towards the end of the year.

Net trading income rose by 27.2 per cent to CHF 173.2 million in the 2023 (2022: CHF 136.1 million). Foreign exchange business made the largest contribution to this success, which at CHF 171.7 million was CHF 42.3 million above the figure in the previous year (2022: CHF 129.3 million). The LLB Group benefitted here from the expansion of the interest differential between foreign currencies and the Swiss franc. Thanks to the active management of excess client funds in foreign currencies – predominantly in euros and US dollars – income from trading business was higher.

Income from financial investments stood at CHF 7.3 million (2022: minus CHF 0.9 million). Developments on the financial markets led to a book gain, measured on the reporting date, of CHF 0.7 million (2022: minus CHF 7.2 million). Earnings from dividends grew by CHF 0.3 million to CHF 6.5 million (2022: CHF 6.3 million).

Other income fell by CHF 10.4 million to minus CHF 2.9 million in comparison with the previous year (2022: CHF 7.5 million). The higher result in the previous year was mainly attributable to the sale of a claim. In 2023, income decreased due to market-related valuation adjustments on properties.

At CHF 348.4 million, operating expenses in 2023 were 6.1 per cent higher than in the previous year (2022: CHF 328.2 million). The increase in both personnel and general expenses was in line with expectations and reflects the investments made in the implementation of the ACT-26 strategy.

Personnel expenses rose by 6.8 per cent or CHF 13.3 million to CHF 209.5 million (2022: CHF 196.1 million). In accordance with its strategy, the LLB Group created around one hundred new jobs, particularly in the digital transformation business area and in the two market divisions. Personnel expenses also increased due to inflation related wage adjustments.

At CHF 99.9 million, general and administrative expenses were 4.1 per cent higher than in the previous year (2022: CHF 96.0 million). This development is due to investments made as part of the new strategy, particularly in IT and marketing.

In addition to operating expenses, investments in digitalisation are also reflected in depreciation and amortisation. Depreciation and amortisation also increased due to one-off write-downs in connection with the Swiss location strategy. Overall, this results in an increase of CHF 2.9 million to CHF 39.0 million (2022: CHF 36.1 million).

The Cost Income Ratio remained stable at 64.3 per cent (2022: 64.0 %).

Balance sheet

In comparison with 31 December 2022, the consolidated balance sheet total expanded mainly due to the increase in customer loans by 1.9 per cent and stood at CHF 25.7 billion on 31 December 2023 (31.12.2022: CHF 25.2 billion).

Equity capital amounted to CHF 2.1 billion on 31 December 2023 (31.12.2022: CHF 2.0 billion). The Tier 1 ratio stood at 19.8 per cent (31.12.2022: 19.7 %). The return on equity amounted to 7.9 per cent (2022: 7.2 %).

Business volume

Compared to 31 December 2022, the business volume increased by 3.9 per cent or CHF 3.9 billion to CHF 102.2 billion (31.12.2022: CHF 98.4 billion) and therefore again exceeded the 100 billion mark.

Loans to customers climbed by 5.9 per cent to CHF 15.3 billion compared with the previous year (31.12.2022: CHF 14.4 billion), whereby mortgage loans grew by 7.2 per cent to CHF 13.8 billion (31.12.2022: CHF 12.9 billion). Further gratifying growth was achieved especially with residential investment properties in Switzerland.

In the 2023 business year, the LLB Group registered a net new money inflow of CHF 1’381 million (2022: CHF 3’609 million). Robust inflows were recorded especially in the Retail and Corporate Clients Division and with the digital wiLLBe product offer. By contrast, outflows were recorded in the cyclical fund business.

On account of the positive market performance and new money inflows, client assets under management climbed by 3.6 per cent to CHF 86.9 billion (31.12.2022: CHF 83.9 billion).

Outlook

Uncertainty will continue to be a part of normality in the coming years. Nevertheless, the LLB Group remains optimistic because rapidly adapting to changing basic conditions is one of its great strengths. In 2024, the LLB Group will continue to pursue its ambitious growth and earnings objectives, as well as its strategic priorities. Accordingly, it expects to achieve a solid result for the 2024 business year.