Letter to shareholders

Information unaudited Information ungeprüft LLB Group with further increase in profit

Dear shareholders

In the past few months we have made further progress towards accomplishing our financial and operative goals and can look back on a successful first half year.

Successfully on course

A particular highlight of the first half year was our business volume attaining the record level of CHF 110 billion for the first time in our over 160-year history. Higher net new money inflows and loans to clients together with the generally positive performance on the financial markets were the main contributors to this growth. Loans to clients grew by CHF 217 million or an annualised rate of 2.8 per cent. In addition, new money inflows amounting to CHF 792 million (annualised 1.8 %) were generated. We increased net profit to CHF 90.2 million, exceeding the result for the equivalent period in the previous year by 1.7 per cent (first half of 2023: CHF 88.7 million).

Operating income improved by 6 per cent to CHF 283.0 million in comparison with the first half of 2023. Interest income and trading income were slightly lower than in the previous year due to the reduction in Swiss franc interest rates. The development of net fee and commission income was especially pleasing. On account of the larger business volume, this exceeded the previous year’s result by nearly CHF 5 million. Risk provisions for credit losses were reduced. Several long-standing legal cases were settled and brought to a successful conclusion. In line with the Group’s strategy operating expenses rose by around 8 per cent. This was largely attributable to the increase in personnel expenses. As planned, we created almost one hundred new jobs in the past twelve months mainly at our new business locations in Germany and Switzerland. In addition, we also expanded human resources in the area of digitalisation. General and administrative expenses increased on account of our investments in digitalisation and higher marketing expenses in connection with the rebranding of the LLB Group.

And even against the backdrop of the strategic investments made for the future, the Cost Income Ratio stood at 65.2 per cent (first half of 2023: 61.0 %) and therefore remained at our strategic target level of 65 per cent.

Growth in Germany and Switzerland

In order to achieve our strategic growth targets, we focus on organic growth. Since the beginning of this year therefore we have established a business presence in Germany for the first time at three locations: Munich, Frankfurt and Dusseldorf. All the locations have developed positively since they were opened in January. With more than thirty employees our team in Germany is now almost complete and there is great interest in the services they offer.

In Switzerland we are expanding in Zurich and St. Gallen. This represents a significant step in realising our growth ambitions in the Swiss market and in improving our services for clients in eastern Switzerland and the greater Zurich region.

Strengthened presence in Austria

In addition to organic growth our ambitious plans also include growth through acquisitions. Following the acquisition of the Semper Constantia Privatbank in 2018, and the taking over of the private banking clients of Credit Suisse in 2021, we now see another opportunity in Austria: LLB AG will acquire 100 per cent of the shares of the ZKB Österreich and therefore increase its business volume by around EUR 3.0 billion. This move enables us to further strengthen our position as one of the leading wealth management banks in Austria while at the same time underlining the strategic importance of the Austrian market. Both LLB Österreich and ZKB Österreich have a similar ownership structure, a similar business model and a similar culture. Furthermore, our two markets complement each other ideally. Thanks to the takeover, we will in future have a strong business presence in Austria’s two most important wealth management centres, Vienna and Salzburg. The merger of LLB Österreich with ZKB Österreich is planned to be completed by the middle of the coming year.

Digitalisation makes further progress

Further progress has been achieved in realising our core element “Efficiency” and we are even closer to accomplishing our goal of greater digitalisation and delivering a modern client experience. Our new digital onboarding process and the introduction of “Salesforce”, a cloud-based software package, have made key contributions to this progress. In the long term therefore we shall be able to process a large proportion of our business on a single platform, which will simplify collaboration and make this more client focused and friendly. In turn, this will enable us to provide our clients with even more specific and individual advisory services.

More progress with sustainability

In relation to sustainability, we are continuing to pursue the goal of achieving complete climate neutrality by 2040. As an important step in this direction, last year we implemented our new mobility concept 2.0. Among other measures, this envisages higher subsidies for our employees when they use public transport facilities. On the product front, we have launched a new renovation calculator. This enables building owners to inform themselves about renovation requirements, costs and subsidy possibilities for sustainable, energy-efficient properties. Last but not least, behind the scenes our sustainability team is working intensively on the format and content of our future sustainability report, which is to be based on the new reporting standards of the European Union.

Outstanding investment expertise

At the prestigious Lipper Fund Awards 2024, LLB secured the top position as best “Overall Manager“ in the category “Small Asset Managers in Germany”. This award honours outstanding performance in at least three equity, bond and strategy funds over the last three years. For investors this is further confirmation that we are rightly regarded as one of the most trustworthy banks in the world.

Best employer in Switzerland and Liechtenstein

We are particularly proud of being presented with the award for achieving first place at the Swiss Employer Awards at the beginning of this year. The award is based on the results of the last employee survey in which our employees gave the LLB Group a very good testimonial. We are discussing the points where there is potential for improvements with our colleagues because the satisfaction of our staff is both an incentive for us and the basis of our success.

Award for new brand

We also received an award for our “brand management” since our corporate rebranding last autumn. The jury of the German Brand Award praised the “impressive transformation” of our brand with its clear and authentic orientation to the future. This prestigious award makes us proud and serves as an incentive for us to continue to strive to be the best.

Outlook

In summary it can be said that we are successful and sustainably profitable. We have set the parameters for further business success with our ACT-26 strategy, more than half of which has now been implemented. In spite of the continuing challenges posed by the business environment, we therefore expect to achieve a solid result for the whole 2024 business year.

Thank you for your trust

Dear shareholders, at the General Meeting in April you approved all the proposals put forward by the Board of Directors and all the election recommendations. The trust you showed in us again drives our motivation and provides the support for us to address the coming challenges and decisions.

Yours sincerely

Georg Wohlwend

Chairman of the Board of Directors

Gabriel Brenna

Group CEO