Consolidated interim management report

Income statement

In the first half of 2019, the LLB Group earned a net profit of CHF 61.1 million (first half of 2018: CHF 45.8 million). The net profit was therefore 33.3 per cent or CHF 15.3 million higher than in the equivalent period in the previous year.

Operating income increased in the first half of 2019 by 20.1 per cent to CHF 223.7 million (first half of 2018: CHF 186.3 million).

Interest income before expected credit losses rose by 7.6 per cent or CHF 5.8 million in comparison with the previous year to CHF 82.6 million (first half of 2018: CHF 76.8 million). Income from interest business with clients decreased slightly. Risk-conscious growth in mortgage lending business and lower refinancing costs were unable to compensate completely for the expected decline in earnings due to the extension of fixed interest loans at lower conditions. Thanks to higher earnings from financial investments and claims due from banks, as well as lower interest rate hedging costs, other income from interest business was significantly higher than in the previous year.

Allowances totalling net CHF 3.7 million for expected credit losses were released by the LLB Group in favour of the income statement in the first half of 2019 (first half of 2018: allocation of CHF 6.0 million).

Net fee and commission income increased by 27.5 per cent or CHF 21.3 million to CHF 99.0 million (first half of 2018: CHF 77.6 million). Both intensive marketing measures, for example as undertaken with our LLB Invest products, and the acquisitions of LB(Swiss) Investment AG and Semper Constantia Privatbank AG made in the previous year, contributed to this success. Net brokerage income declined by 7.7 per cent in comparison with the previous year, due to lower stock market activity by clients.

Net trading income stood at CHF 26.8 million in the first half of 2019 (first half of 2018: CHF 34.4 million). Trading in foreign exchange, foreign notes and precious metals decreased in comparison with the previous year by 7.6 per cent to CHF 26.7 million on account of fewer market opportunities. The reporting date valuation of interest rate hedging instruments totalled CHF 0.1 million in the first half of 2019 (first half of 2018: CHF 5.5 million). The fall in valuation was attributable to the development of CHF interest rates, which fell in the first half of 2019.

Income from financial investments of CHF 6.0 million made a positive contribution to the business result (first half of 2018: minus CHF 10.4 million). The stock market development as well as lower USD and EUR interest rates led to book gains of CHF 4.5 million on the reporting date with financial investments measured at fair value through profit and loss compared with a loss of CHF 10.9 million in the first half of 2018.

At CHF 5.6 million, other income rose by CHF 3.7 million compared with the previous year. The increase was mainly attributable to changes in the value of purchase price obligations in relation to acquisitions.

Operating income (in CHF millions)

Operating expenses increased in the first half of 2019 by 16.1 per cent to CHF 152.2 million (first half of 2018: CHF 131.1 million).

At CHF 95.0 million, personnel expenses were 16.6 per cent or CHF 13.5 million up on the previous year (first half of 2018: CHF 81.5 million). The increase is attributable to the strategic expansion of human resources as well as the takeovers of LB(Swiss) Investment AG as well as Semper Constantia Privatbank AG in the previous year.

General and administrative expenses rose by 5.3 per cent or CHF 1.9 million to CHF 36.8 million (first half of 2018: CHF 34.9 million). The current business result contains a net release of provisions for legal and litigation risks of CHF 1.2 million.

Depreciation and amortisation increased to CHF 20.4 million (first half of 2018: CHF 14.7 million). This relates to the introduction of IFRS 16 “Leasing”.

The Cost-Income-Ratio stood at 69.7 per cent (first half of 2018: 72.8 %). Without the market effects, i.e. without income from interest rate swaps and price gains from financial investments, the Cost-Income-Ratio stood at 71.2 per cent (first half of 2018: 70.7 %).

The profit attributable to the shareholders of Liechtensteinische Landesbank amounted to CHF 57.5 million (first half of 2018: CHF 42.1 million). Earnings per share stood at CHF 1.88 (first half of 2018: CHF 1.46).

Balance sheet

In comparison with 31 December 2018, the consolidated balance sheet total increased by 1.0 per cent and amounted to CHF 23.1 billion as at 30 June 2019 (31.12.2018: CHF 22.9 billion). Loans to customers rose in total by 1.3 per cent in comparison with 31 December 2018. Mortgage loans increased by 1.0 per cent to CHF 11.2 billion.

Equity attributable to the shareholders of LLB stood at CHF 1.9 billion as at 30 June 2019. The tier 1 ratio amounted to 19.0 per cent (31.12.2018: 19.0 %). The return on equity attributable to the shareholders of LLB was 6.1 per cent (first half of 2018: 4.8 %).

Assets under management

Thanks to gratifying net new money inflows and the positive performance of the financial markets, client assets under management increased to CHF 72.6 billion (31.12.2018: CHF 67.3 billion).

The LLB Group is continuing its robust growth. Thanks to intensive sales and marketing efforts in all three market segments and all booking centres, it achieved a net new money inflow of CHF 2’004 million in the first half of 2019 (first half of 2018: CHF 1’119 million).

Assets under management (in CHF billions)

Outlook

The banking industry is facing formidable challenges in the form of the difficult business environment, which is characterised by volatile financial markets, increasing regulation and the transformation of information technology.

Thanks to its focused business model, diversified earnings structure and clear StepUp2020 strategy, the LLB Group views the future with confidence. The LLB Group expects to make further operative progress and achieve a solid business result in the second half year 2019.