Consolidated interim management report (unaudited)

Information checkedInformation unaudited Information geprüft Information ungeprüft Consolidated interim management report

Income statement

In the first half of 2023, the LLB Group earned a net profit of CHF 88.7 million, which is 16.8 per cent higher than in the same period of the previous year (first half of 2022: CHF 75.9 million).

The profit attributable to the shareholders of Liechtensteinische Landesbank AG amounted to CHF 88.6 million (first half of 2022: CHF 74.1 million). Undiluted earnings per share stood at CHF 2.89 (first half of 2022: CHF 2.42).

Operating income increased by 10.5 per cent to CHF 267.2 million in the first half of 2023 (first half of 2022: CHF 241.9 million).

In comparison with the same period in the previous year, interest income before expected credit losses rose by 11.4 per cent or CHF 8.4 million to CHF 81.8 million (first half of 2022: CHF 73.4 million). In interest business with clients, attractive conditions on deposits benefitted clients. Accordingly, interest expense increased. At the same time, interest income from lending business improved. Due to the extension of expiring fixed-interest loans over the next few years, the outlook is also positive. In addition, the LLB Group is benefiting from its strong growth. Other income from interest business expanded as a result of treasury activities. These included deposits with central banks.

Risk provisions in the first half of 2023 amounted to net CHF 2.1 million (first half of 2022: CHF 3.4 million net allocation).

In comparison with the previous year, net fee and commission income fell by CHF 15.0 million to CHF 97.7 million (first half of 2022: CHF 112.7 million). Portfolio-dependent revenues decreased in comparison with the previous year on account of lower average portfolio positions due to market-related factors. At the same time, transaction-related revenues also declined. In the previous year exceptionally high earnings were attained in real estate business in Austria. As expected, it was not possible to repeat this result in the current interest rate situation. In addition, client trading activity was lower due to their switching into more attractive interest rate products. In turn this meant earnings from net brokerage fees were lower.

Net trading income increased by 55.1 per cent in the first half of 2023 to CHF 82.5 million (first half of 2022: CHF 53.2 million). Foreign exchange business made a major contribution to this success, climbing to CHF 81.3 million, CHF 32.8 million higher than in the equivalent period in the previous year (first half of 2022: CHF 48.5 million). The LLB Group benefitted here from the rise in interest rates and to a large degree from the preponderance of liability items in its balance sheet, mainly due to client deposits in US dollars and euros. The expansion of interest differential business, with the accompanying increase in earnings, was achieved effectively without incurring additional risks.

Income from financial investments stood at CHF 6.9 million (first half of 2022: minus CHF 0.8 million). Developments on the financial markets led to a book gain, measured on the reporting date, of CHF 0.7 million (first half of 2022: minus CHF 6.5 million). Earnings from dividends grew by CHF 0.5 million to CHF 6.2 million (first half of 2022: CHF 5.7 million).

Other income fell by CHF 6.3 million to CHF 0.5 million in comparison with the previous year (first half of 2022: CHF 6.8 million). The higher result in the previous year was mainly attributable to the sale of a claim.

At CHF 164.3 million, operating expenses in the first half of 2023 were 6.3 per cent higher than in the previous year (first half of 2022: CHF 154.5 million). The increase in both personnel and general expenses is in line with expectations and reflects the investments in the implementation of the ACT-26 strategy.

Personnel expenses rose by 5.7 per cent or CHF 5.5 million to CHF 101.7 million (first half of 2022: CHF 96.2 million). In accordance with its strategy, the LLB Group expanded its human resources particularly in the business areas of “Digital Transformation”.

At CHF 42.5 million, general and administrative expenses were 5.8 per cent up on the previous year (first half of 2022: CHF 40.2 million). The increase was attributable to higher costs for IT systems and marketing activities.

Depreciation rose by CHF 2.0 million to CHF 20.1 Million (first half of 2022: CHF 18.1 million) as a result of one-time write downs in connection with the business location strategy for Switzerland.

The Cost Income Ratio improved to 61.0 per cent (first half of 2022: 62.8 %).

Balance sheet

In comparison with 31 December 2022, the consolidated balance sheet total increased by 0.1 per cent and amounted to CHF 25.3 billion as at 30 June 2023 (31.12.2022: CHF 25.2 billion).

Equity attributable to the shareholders of LLB stood at CHF 2.1 billion as at 30 June 2023 (31.12.2022: CHF 2.0 billion). The Tier 1 ratio stood at 19.2 per cent (31.12.2022: 19.7 %). The return on equity attributable to the shareholders of LLB amounted to 8.7 per cent (first half of 2022: 7.2 %).

Business volume

In comparison with 31 December 2022, the business volume expanded by 4.0 per cent or CHF 3.9 billion to CHF 102.3 billion (31.12.2022: CHF 98.4 billion).

Compared with 31 December 2022, loans to customers grew by 2.9 per cent to CHF 14.9 billion (31.12.2022: CHF 14.4 billon), whereby mortgage loans increased by 3.5 per cent to CHF 13.3 billion (31.12.2022: CHF 12.9 billion). Additional growth was achieved particularly in corporate client business and with investment properties.

On account of the positive market performance and new money inflows, client assets under management climbed by 4.2 per cent to CHF 87.4 billion (31.12.2022: CHF 83.9 billon).

In the first half of 2023, the LLB Group posted a net new money inflow of CHF 806 million (first half of 2022: CHF 2'509 million). Thanks to intensive activities and sales in the markets, new money inflows were attained in both market segments. Growth was especially pleasing in private banking in Liechtenstein, where increased demand for these services from clients from Germany was discernible.

Outlook

The current business year remains marked by numerous uncertainties: geopolitical risks, inflationary pressure and the danger of recession have not yet been banished. With the turnaround in interest rates, the market environment has changed permanently. In the medium term, a decline in interest rates is not to be expected. We are confident that we will be able to maintain the momentum of the first half of the year and continue the positive development. We expect a solid result for the LLB Group for the year as a whole.