Letter to shareholders

Information checkedInformation unaudited Information geprüft Information ungeprüft LLB Group reports very good first half year

Dear shareholders

Inflation, major bank crisis, war in Ukraine, headlines such as these have dominated the daily news over the last few months. Therefore, it gives us all the more pleasure that – despite this challenging environment – the LLB Group can report very pleasing first half year.

Strong first half year result

Following an extremely successful business year in 2022, we were again able to increase profitability in the first half year of 2023. At CHF 88.7 million, Group net profit exceeded the level of the previous year by 16.8 per cent and therefore represents the best half year result for more than ten years. Operating income grew by CHF 25.3 million or 10.5 per cent to CHF 267.2 million (first half of 2022: CHF 241.9 million), whereby the LLB Group benefitted from interest rate increases in the major currencies. In contrast, operating expenses rose in line with the Group's strategy by 6.3 per cent to CHF 164.3 million (first half of 2022: CHF 154.5 million). This was largely attributable to the growth in personnel expenses because in the previous months the LLB Group created more than a hundred additional jobs. In spite of these investments in the future, the Cost Income Ratio again improved to 61.0 per cent (first half of 2022: 62.8 %). This reflects both the LLB Group's higher earnings and constantly improving efficiency.

All-round growth also contributed to this positive development in the first half year of 2023. The growth in lending business was particularly pleasing. New loans to customers totalling CHF 455.0 million were made, corresponding to an annualised growth rate of 6.3 per cent (full year 2022: 5.5 %). We achieved particularly good growth in corporate client business. The net new money inflow amounted to CHF 805.6 million, corresponding to an annualised growth rate of 1.9 per cent (full year 2022: 3.9 %). Thanks to organic growth and the positive market effects in the first half year, the business volume again expanded and, following on 2021, rose again over the 100-billion francs level. As at 30 June 2023, it stood at CHF 102.3 billion (31.12.2022: CHF 98.4 billion).

Successful implementation of the ACT-26 strategy

The ACT-26 strategy encompasses the three core elements: growth, efficiency and sustainability. It stands for the consistent further development of the LLB Group as well as for its technological and sustainable transformation. Its implementation is progressing according to plan because we were able to take significant steps in the first half of 2023 to enable us to attain our ambitious objectives.

Growth

To enable us to continue growing, we are intensifying our activities in Switzerland in the coming years, especially in relation to expanding private banking, corporate client business and our activities with external asset managers. Private client business will continue to be a central pillar of our operations. As part of our strategic development we plan to open new business locations in Zurich and St. Gallen. Forty new jobs are to be created in support of our growth ambitions.

In Germany we are also envisaging robust growth and planning to care for our clients locally. For this purpose, we shall open three new business locations in Frankfurt, Dusseldorf and Munich at the beginning of 2024.

The ACT-26 corporate strategy and the dual positioning as the leading bank in Liechtenstein as well as in the adjacent region, and as a secure, sustainable, international private bank are soon to be reflected in a uniform corporate appearance on the market: from mid-September all the Group companies will operate under the modern, strong “LLB” brand.

Efficiency

Our digital transformation programme LLB.ONE is also progressing according to plan. For example, in addition to a new messaging centre for our clients, we have launched various additional self-service online banking possibilities such as enabling clients to change address and contact data independently, or balance accounts themselves. In the area of mobile payments, Samsung Pay offers our clients attractive new possibilities; while in relation to financing facilities our private clients can now extend mortgage loans online. Furthermore, we have received very positive feedback regarding our electronic tax statement for clients in Switzerland. Further innovations are planned in the coming months.

Sustainability

Further progress has been made in relation to sustainability, our third core element. For instance, in our banking operations we have successfully reduced our greenhouse gas emissions compared to the base year. A new mobility concept has also been finalised and will soon be implemented. We were also able to take another important step towards achieving complete climate neutrality at the beginning of August 2023 by deciding to completely withdraw from investments in companies in the fossil energy sector in our own investment. We are particularly proud of our new financing solutions with which we want in future to promote sustainable construction in our home market of Liechtenstein. Starting in 2024, clients who carefully consider energy efficiency when undertaking a new build or building renovation can benefit from very preferential conditions.

Elections to the Board of Directors

After Gabriela Nagel-Jungo and Urs Leinhäuser stood down from the Board of Directors due to the legal term of office limitation rule, at the 31^st General Meeting of Shareholders in May Nicole Brunhart, a business economist, and Christian Wiesendanger, a financial expert, were elected as new members of the Board. With these new and the incumbent members we want to continue the successful development of the LLB Group.

Outlook

The current business year continued to be characterised by numerous uncertainties such as geopolitical risks, persisting inflationary pressure and the threat of recession. Thanks to the turnaround with interest rates, the market environment has changed significantly. From a medium-term perspective, no reduction in interest rates is to be expected. We are confident that we can maintain the momentum generated in the first half year and continue our positive business development. We expect to achieve a solid result for the full year for the LLB Group.

A note of thanks

We would like to thank you, our esteemed shareholders, for your loyalty and commitment to our company. A sincere note of thanks also goes to our clients for their trust in us. The times are indeed challenging, but with our clear strategy, strong values and competent employees we are confident we can continue to achieve success in the future.

Yours sincerely

Georg Wohlwend

Chairman of the Board of Directors

Gabriel Brenna

Group CEO