Consolidated interim management report (unaudited)

Information unaudited Information ungeprüft Consolidated interim management report

Income statement

In the first half of 2024, the LLB Group earned a net profit of CHF 90.2 million, 1.7 per cent higher than in the same period of the previous year (first half of 2023: CHF 88.7 million). Undiluted earnings per share stood at CHF 2.95 (first half of 2023: CHF 2.89).

Operating income increased by 5.9 per cent to CHF 283.0 million in the first half of 2024 (first half of 2023: CHF 267.2 million).

In comparison with the same period in the previous year, interest income before expected credit losses fell by 17.2 per cent to CHF 67.7 million (first half of 2023: CHF 81.8 million). Income from interest business climbed by 31.6 per cent to CHF 261.2 million (first half of 2023: 198.5 million). Both earnings from loans to clients and from deposits with central banks increased in comparison with the equivalent period in the previous year. Interest expense increased by 65.8 per cent to CHF 193.5 million (first half of 2023: CHF 116.7 million). On the one hand, the LLB Group offers its clients attractive interest rates on time deposits and savings deposits. On the other, interest expense increased further due to clients switching into fixed interest products.

In the first half of 2024, risk provisions for credit losses were reduced by net CHF 11.0 million (first half of 2023: CHF 2.1 million net allocation). Several long-standing legal cases were settled and brought to a successful conclusion.

In comparison with the previous year, net fee and commission income rose by CHF 4.7 million to CHF 102.3 million (first half of 2023: CHF 97.7 million). The first half year was marked by the positive development of the volume of LLB Invest. Holdings in asset management and investment advisory mandates increased by 11 per cent. Thanks to the increase in client assets under management, higher earnings from portfolio-related fees were recorded. These rose to CHF 71.3 million (first half of 2023: CHF 67.9 million). In addition, transaction-related revenues improved slightly in comparison with the previous year reaching CHF 31.1 million (first half of 2023: CHF 29.7 million). Earnings from net brokerage fees developed positively.

Net trading income expanded by 10.8 per cent during the report period to CHF 91.4 million (first half of 2023: CHF 82.5 million). Foreign exchange business was the largest contributor to this success climbing by CHF 7.5 million to CHF 88.8 million relative to the same period in the previous year (first half of 2023: CHF 81.3 million). The LLB Groupʼs trading income benefited from the investing of client foreign currency assets in Swiss franc currency swaps. The interest differential between foreign currencies and the Swiss franc had a positive effect. Cuts in Swiss franc interest rates coupled with a stable US dollar boosted this effect in the first half year.

Income from financial investments stood at CHF 6.9 million and was therefore at the same level as in the previous year (first half of 2023: CHF 6.9 million).

In comparison with the previous year, other income rose by CHF 3.1 million to CHF 3.6 million (first half of 2023: CHF 0.5 million). Successful loan recovery measures in 2024 contributed to this result. Furthermore, other income was lower in the previous year due to valuation adjustments made on real estate.

At CHF 177.2 million, operating expenses in the first half of 2024 were 7.9 per cent higher than in the previous year (first half of 2023: CHF 164.3 million). The increase in both personnel expenses and general and administration expenses was in line with expectations and reflects the investments made in implementing the ACT-26 strategy.

Personnel expenses grew by 11.8 per cent or CHF 12.0 million to CHF 113.7 million (first half of 2023: CHF 101.7 million). In accordance with its strategy, the LLB Group created around one hundred new jobs during the last twelve months, mainly in its new business locations in Germany and Switzerland. In addition, further recruitments were made in the area of digital transformation. Inflation-related increases in salaries also added to the higher personnel expenses.

At CHF 46.1 million, general and administrative expenses were 8.5 per cent higher than in the previous year (first half of 2023: CHF 42.5 million). The increase was attributable to the further investments made in digitalisation and to higher marketing expenses in connection with the rebranding of the LLB Group.

Depreciation was lower, falling by 13.3 per cent to CHF 17.5 million (first half of 2023: CHF 20.1 million). The decrease was mainly related to the higher write downs made in the previous year in connection with the business location strategy for Switzerland.

The Cost Income Ratio was unsurprisingly higher on account of investments made in line with the LLB Group′s strategy, rising to 65.2 per cent (first half of 2023: 61.0 %).

Balance sheet

The consolidated balance sheet total remained stable at CHF 25.5 billion (31.12.2023: CHF 25.7 billion).

Equity stood at CHF 2.2 billion as at 30 June 2024 (31.12.2023: CHF 2.1 billion). The Tier 1 ratio stood at 19.7 per cent (31.12.2023: 19.8 %). The return on equity amounted to 8.4 per cent (first half of 2023: 8.7 %).

Business volume

In comparison with 31 December 2023, the business volume expanded by 7.5 per cent or CHF 7.7 billion to CHF 109.9 billion (31.12.2023: CHF 102.2 billion), a new record level.

Compared with 31 December 2023, loans to customers grew by 2.1 per cent to CHF 15.6 billion (31.12.2023: CHF 15.3 billion), whereby mortgage loans increased by 3.8 per cent to CHF 14.3 billion (31.12.2023: CHF 13.8 billion). A major portion of the growth was achieved through collateral loans extended against income-generating real estate portfolios in Switzerland.

Thanks to the positive market performance and new money inflows, client assets under management climbed by 8.4 per cent to CHF 94.3 billion (31.12.2023: CHF 86.9 billion).

In the first half of 2024, the LLB Group registered a net new money inflow of CHF 792 million (first half of 2023: CHF 806 million). Gratifying inflows were recorded above all at LLB Österreich, at our business locations in Germany, as well as with the digital “wiLLBe” app.

Outlook

The LLB Group is continuing its sustained profitable development. It has set the parameters for its further business success with its ACT-26 strategy, more than half of which has now been successfully implemented. In spite of the continued challenges posed by the business environment, the LLB Group therefore expects to achieve a solid result for the year 2024 as a whole.