Release Date: July 26, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Profit before tax increased by 12% to CHF173 million, indicating strong financial performance.
- Net inflows of CHF2.3 billion were driven by strong inflows from private clients and a halt in institutional client outflows.
- Assets under management with private clients surpassed the CHF100 billion mark for the first time.
- The acquisition of a significant minority stake in Ancala expands investment capabilities and represents a growth avenue.
- The efficiency program is on track, with a target to achieve a gross cost reduction of CHF100 million by the end of 2026.
Negative Points
- Net interest income decreased by 34% due to rising refinancing rates and a shift in the deposit mix.
- The group net profit saw a modest increase of only 2% due to an increase in the tax rate from 17% to 25%.
- Foreign exchange effects resulted in a profit reduction of CHF10 million versus the first half of 2023.
- The CET1 ratio decreased to 18.3% due to increased client activity and the Ancala acquisition.
- Institutional clients' revenues decreased by 3%, influenced by previous reductions in assets under management.
Q & A Highlights
Q: Could you explain the 3 basis point improvement in gross margin for institutional clients despite net new money being close to zero?
A: Thomas Heinzl, CFO, explained that the improvement was due to rounding, currency effects from fee calculations, and catch-up payments from the previous year. The margin in the second half of 2023 was artificially compressed, which contributed to the rebound.
Q: How should we think about the cost savings and investments in the business?
A: Christel Rendu De Lint, Co-CEO, stated that the efficiency program is designed to allow continued investment in growth. The target is a 72% cost-income ratio, achievable regardless of market conditions. The program aims to enhance productivity without compromising growth opportunities.
Q: Why is there a need for such a large cost savings program if margins are expected to improve?
A: Thomas Heinzl, CFO, clarified that the efficiency program is not just about cost-cutting but improving productivity and scalability. The goal is to enhance the marginal cost-to-income ratio and support growth without damaging revenue potential.
Q: Can you discuss the outlook for institutional and private client flows?
A: Georg Schubiger, Co-CEO, noted that the changing economic environment is bringing investors back, benefiting fixed income, multi-asset, and equity strategies. On the private side, continued hiring of relationship managers is expected to drive growth, despite quarterly fluctuations.
Q: What drove the significant increase in structured solutions revenues, and is it sustainable?
A: Thomas Heinzl, CFO, mentioned that increased trading activity, particularly in FX and crypto products, drove the revenue increase. While volatility benefits the business, sustainability depends on market conditions, such as potential volatility ahead of the US elections.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
