Liechtenstein-based private bank LGT has reported a decrease in its profit in 2020, hit by a $63.7m (CHF59m) earn-out in connection to the completion of the LGT Vestra takeover.
However, assets under management continued to grow despite a challenging market caused by the Covid-19 pandemic.
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Highlights
The private bank’s group profit for the full year ending 31 December 2020 was CHF291.5m, 5% lower than the previous year figure of CHF308.1m.
When stripping off the one-off effect from the completion of the LGT Vestra acquisition, profit increased 14%.
Total operating income rose 2% to CHF1.85bn from CHF1.82bn. Income from services rose 2% year-on-year to CHF1.19bn as a result of higher income from the brokerage business as well as portfolio management mandates.
Income from trading activities and other operating income soared 19% to CHF437.2m from CHF368.2m.
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By GlobalDataA negative interest rate environment and lower lending volumes affected net interest income, which fell 19% to CHF230.7m from CHF286.1m.
Total operating expenses of CHF1.39bn in 2020 was 3% higher than 2019. This reflected a 5% rise in personnel expenses to CHF1.12bn though lower travel and event costs led to a fall of around 5% in business and office expenses to CHF268.6m.
Assets under management totalled CHF240.7bn as of 31 December 2020, up 6% from a year ago.
This was aided by favourable market and investment performance and net inflows, mainly during the second half of 2020. The bank reported inflows of CHF11.6bn in 2020, corresponding to a growth rate of 5%.
Inflows were reported across all regions and from both Private Banking and Asset Management, noted the bank.
This compares to inflows of CHF13.9bn and a growth rate of 7% in 2019.
LGT’s cost-income ratio stood at 75% at the end of 2020, versus 74.1% in the prior year.
Outlook
LGT remains confident in its outlook and said that it will continue to generate “profitable growth” this year despite the challenging market.
According to the firm, it is “very well positioned” in the market to create long-term value for its clients, employees and other stakeholders.
Meanwhile, it continues to grow globally. Its Bangkok office, which launched in 2019, currently has a workforce of 24.
It also agreed to buy the domestic wealth management business of UBS in Austria, thereby adding nearly €4bn to its books. Around 60 employees are expected to join LGT as a result of the deal, which is slated to close in Q3 2021.
Moreover, LGT is evaluating various related options to reestablish a local presence in Germany.
LGT chairman Prince Max von und zu Liechtenstein: “Going forward, sustainability will continue to be a priority across our advisory services and investment solutions, and we intend to remain a pioneer in this area in 2021.
“Last year, we took important steps to strengthen our market position through our new organisational structure, and we will continue to systematically implement this structure in 2021.”
