Banca del Gottardo, a member of the Swiss Life Group, posted good results overall in the first half of 2007. The favourable market environment helped to boost revenues despite the considerable impact of staff departures in autumn 2006. Expenses were down slightly over the previous year. A successful management of loan legacies meant that some provisions could be released, which had a positive impact on net income. The net profit of CHF 85 million includes one-off factors of CHF 27 million after taxes, with the most important position being the release of provisions. Net income not including the one-off factors was CHF 58 million, compared to CHF 51 million in the previous year.
Rolf Aeberli, Chief Executive Officer of Banca del Gottardo, commented: “The trend in net income shows that we are on the right path. But I am disappointed about the considerable outflow of client funds due to the staff departures last autumn. Nevertheless, we were able to increase revenues despite the lower asset base, which I view as positive. The trend in net new inflows in the regions and segments that were not affected by the staff departures, and the increase in confidence among our staff are strong signals. I am convinced that we will now be able to exploit our full potential.”
Solid operating result
Net revenues increased 5% to CHF 243 million over the first half of 2006. Income from trading operations improved by 9%, benefiting in particular from the favourable market conditions. Interest income rose by 5%, and commission and service fee activities also posted an increase of 5% despite the lower asset base.
Operating expenses fell during the period by 3% to CHF 156 million. Administrative and general expenses fell by 12% due to reduced project costs, while personnel costs rose by 4% due to additions to the front office and to training programmes. The cost/income ratio fell from 69% to 65%.
The consolidated shareholders’ equity of Banca del Gottardo was CHF 878 million as at 30 June 2007 compared to CHF 1 billion in the previous year. The return on equity increased from 16%
Successful management of legacies in lending business
Active management of credit positions enabled CHF 34 million in provisions to be released during the period. A major portion of this sum came from a previous single risk position, which was closed out without losses in the first half of 2007.
The impact of staff departures overshadows positive new client inflows
The net outflow of client money from Private Banking in the amount of CHF 875 million compared to a net inflow in the prior year of CHF 399 million is primarily due to the departure of client advisor teams in Lugano and Luxembourg last autumn. Excluding the assets managed by the teams, nearly every location of the Bank posted a further increase in net new money compared with the first half of 2006. The gross new money from Private Banking amounted to over CHF 900 million in the first half of 2007.
The effect of the client team departures last year had been anticipated by Banca del Gottardo, although not to this extent. In the meantime the outflows from the portfolios involved have mostly been stopped. Since the end of 2006 there have been no more departures of client advisor teams, and the job positions have been filled again with highly qualified employees.
Client assets under management (excluding custody business) was CHF 36 billion as at 30 June 2007 compared to CHF 34 billion at the end of June 2006. The volume of custody business increased during the same period from CHF 42 billion to CHF 68 billion. Total assets under control thus amounted to CHF 104 billion as at June 30.
CEO Rolf Aeberli: “Over the past 18 months Banca del Gottardo has achieved many of its strategic targets and is now well positioned. Our most important priority is to raise our earning power at the operating level, which has increased but not enough. We want to make additional financial progress quickly through targeted initiatives on both the revenue side and the cost side. For 2007 overall we expect good results and the targets announced for 2008 have been confirmed.”
Banca del Gottardo’s consolidated annual financial statements will be published on the 19 February 2008.
Banca del Gottardo, which celebrates its 50th anniversary in 2007, is a Swiss bank which focuses on private banking. It is headquartered in Lugano and has subsidiaries, branches and representative offices in Zurich, Geneva, Lausanne, Bellinzona, Chiasso, Locarno, Bergamo, Milan, Rome, Treviso, Turin, Athens, Luxem¬bourg, Madrid, Paris, Hong Kong and Nassau. Banca del Gottardo belongs to the Swiss Life Group, which is listed on the SWX Swiss Exchange and is one of the leading suppliers of pension and life insurance solutions in Europe. www.gottardo.com