Release Date: August 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- VZ Holding AG (XSWX:VZN, Financial) reported a top-line growth of 12.8%, reaching CHF252.9 million.
- The company achieved a bottom-line increase of 19.1%, resulting in a net profit of CHF102.8 million.
- Assets under Management (AuM) increased by 16.4% to CHF49.6 billion.
- The company gained 4,188 new households using its platform services.
- VZ Holding AG (XSWX:VZN) plans to expand its consulting capacity by 8% in 2024 and further in 2025.
Negative Points
- Net interest income is expected to decline in the second half of 2024 due to SNB interest rate cuts.
- Transaction fees decreased due to the strong demand for all-in fee models and index-oriented investment styles.
- The EBIT margin decreased from 49.2% in the second half of 2023 to 47.1% in the first half of 2024.
- The company experienced higher claims in its insurance business, which were conservatively reserved.
- The net new money number per consulting capacity was slightly weaker than in the first half of 2023.
Q & A Highlights
Q: Can you provide more details on the net new money per FTE and the impact of market volatility on client mood?
A: Giulio Vitarelli, CEO: The net new money per FTE in the second quarter was higher than in the first quarter, reflecting improved client sentiment. However, we do not expect it to exceed CHF20 million per FTE in the second half. Market volatility did not significantly affect client mood due to a quick recovery.
Q: What are your expectations for net interest income given the rate cuts by the Swiss National Bank?
A: Rafael Pfaffen, CFO: We expect rates to decrease by 50 basis points in September and another 25 basis points in spring 2025. This will impact net interest income, but the overall effect will be moderate.
Q: Can you explain the higher claims in the insurance business?
A: Rafael Pfaffen, CFO: Higher claims were conservatively reserved due to the newness of our business. We expect some reserves to be released in the second half, and overall claims ratio should not be higher than in 2023.
Q: What is your long-term growth expectation for top and bottom lines?
A: Giulio Vitarelli, CEO: Our long-term average growth potential is around 10% per year for both top and bottom lines. This is what we expect for 2024, although it may be slightly higher depending on various factors.
Q: How significant is the impact of the SNB's changes to minimum reserves on your net interest income?
A: Rafael Pfaffen, CFO: The impact is not very significant. While the SNB no longer pays interest on minimum reserves, the overall threshold for full interest rates has increased, balancing out the effect.
Q: Can you elaborate on the strong performance of client portfolios in the first half?
A: Giulio Vitarelli, CEO: The strong performance was driven by market-related gains, as our clients' portfolios are roughly 50% stocks and 50% other securities, mostly invested passively.
Q: Has the trend of clients focusing on managing debt exposure changed?
A: Giulio Vitarelli, CEO: The trend of clients amortizing mortgages due to higher interest rates has weakened in 2024, especially with the SNB cutting interest rates.
Q: Was the handover of Lumin's founders planned in advance?
A: Giulio Vitarelli, CEO: Yes, the handover was planned as part of the succession plan when we acquired 50% of Lumin in 2021. The founders will retire in 2026, and we are gradually integrating our management team.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
