LGT Group saw very positive net new money growth in the 2011 financial year, with inflows of CHF 8.6 billion. At the end of 2011 assets under management came to CHF 86.9 billion, a slight year-on-year improvement despite negative market and currency effects.
LGT Group saw group profit decline 52% to CHF 70 million. This result includes one-time write-offs of CHF 50 million in connection with the sale of LGT Bank Deutschland. LGT Group is very well capitalized, with a Tier 1 capital ratio of 17.5% at the end of the year.
Financial industry earnings were affected in 2011 by a combination of market and economic uncertainty, the debt crisis, and turbulence on the currency markets. Client activity remained cautious as a result. In this environment LGT Group saw a 5% decline in income from services, while net interest income was up 12% on higher client deposits. After increasing a sharp 58% in 2010, income from trading activities and other operating income fell at a similar rate in 2011. Contributory factors included currency and hedging losses and depreciation on securities, as well as write-offs in connection with the sale of LGT Bank Deutschland. The overall result was a 20% decline in total operating income to CHF 709 million.
Operating expenses fell 17% to CHF 566 million in 2011, with personnel expenses reduced by 11%, and business and office expenses down 29%. Excluding the payment of EUR 50 million to the German authorities in 2010, business and office expenses declined 4%, reflecting ongoing cost-saving measures and the implementation of the group’s international growth strategy, including the opening of the bank in Hong Kong.
Depreciation, amortization and provisions fell 13% to CHF 46 million during the reporting period. This figure includes depreciation on IT investments in connection with the sale of LGT Bank Deutschland. Together with write-offs charged to income from trading activities and other operating income, the total costs associated with exiting the private banking business in Germany came to CHF 50 million.
Due to this one-time extraordinary effect, LGT Group posted a group profit of CHF 70 million for the 2011 financial year, down 52% on the CHF 148 million recorded in 2010. With a Tier 1 capital ratio of 17.5% on 31 December 2011 (versus 19.3% at the end of 2010) the company has a good liquidity profile and is very well capitalized.
Strong growth in net new money
In 2011 LGT Group attracted net new money of CHF 8.6 billion, equivalent to more than 10% of assets under management. All LGT fields of business and booking centers, including Liechtenstein, contributed to this very positive result. Inflows in the institutional asset management and fund businesses were driven primarily by good long-term investment performance. Among other things, LGT was named best European fund company by Lipper, and won the “Private Equity Asset Manager of the Year” award in the “Financial Times spn Awards 2011”.
Assets under management came to CHF 86.9 billion on 31 December 2011, versus CHF 86.1 billion at the end of 2010. Excluding the CHF 3.0 billion managed at the end of 2010 by LGT Bank Deutschland, which was sold in the course of the year, LGT Group grew its assets under management by 4.6% despite negative market influences.
LGT has had a very good start to 2012, and is confident for the remainder of the year despite continued uncertainty on market and economic developments.
H.S.H. Prince Max von und zu Liechtenstein, CEO of LGT Group: “For us 2011 was a year of contradictions. It was disappointing that we weren’t able to go ahead with the planned takeover of BHF Bank and therefore decided to sell our bank in Germany – with the resulting one-off cost implications. So we’re all the more delighted to have been able to attract such substantial inflows of new money, and to have put in a good operational performance despite a challenging market environment. In the first months of 2012 we have announced two acquisitions that strengthen our asset management business: an interest in Quantis in Hungary, and the acquisition of Clariden Leu’s insurance-linked investment business. We believe we’re very well positioned to continue attracting healthy inflows of new assets and further improve our profitability. We will continue to invest in the organic growth of our units in Asia, Switzerland, Austria and Liechtenstein, as well as in our asset management business, and are still interested in selective new acquisitions as well.”