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Banca del Gottardo on course after repositioning

10.08.2006

Banca del Gottardo increased its first-half net profit 2006 over the same period last year to CHF 83 million. Excluding capital gains realised from the sale of companies no longer part of the bank’s core business and exceptional expenses arising from its repositioning, net profit was CHF 51 million. In comparison, net profit in the first half of 2005 was CHF 44 million. Net new asset growth in private banking was CHF 399 million in the first half of 2006. Banca del Gottardo expects solid results for the year as a whole and believes it is on the way to achieving its medium-range strategic and financial objectives.

Results for Banca del Gottardo, a member of the Swiss Life Group, for the first half of 2006 reflect both excellent market conditions in the first four months as well as the bank’s efforts to reposition itself. With a consolidated net profit of CHF 83 million (CHF 51 million excluding special factors), Banca del Gottardo's figures are well above those of the same period in 2005 (CHF 44 million).

Rolf Aeberli, Chief Executive Officer of Banca del Gottardo: “The half-year result meets our expectations at the operating level. In addition, it reflects a range of special factors associated with our transition to the new strategic orientation. When I consider this fundamental repositioning and the challenges it poses for our employees, I am very satisfied with these figures."

The special factors in question arise from the various measures undertaken in connection with the bank's repositioning and affect the after-tax result, either positively or negatively, as follows:

- CHF 70 million net capital gains from the sale of Dreieck Industrie Leasing and Banca del Gottardo (Monaco), which are both no longer part of the bank’s core business
- CHF 21 million in provisions following a revaluation of various credit and process risks
- CHF 12 million in provisions for the ongoing transformation process
- CHF 5 million for the outsourcing of selected IT areas and the migration to a new IT platform


Pleasing operating result

Net revenues were down 2% from the first half of 2005 to CHF 232 million, reflecting in particular the sale of the former subsidiaries, whose contribution was no longer included. Interest income in particular declined (-13%) as a result of the sale of Dreieck Industrie Leasing, while commission and service fee activities were up 2% despite a reduction of assets under management. Income from trading operations remained stable at last year’s high level.

First-half operating expenses rose 3.5% to CHF 161 million, but excluding special factors expenses decreased to CHF 155 million. At 66% (excluding special factors), the cost/income ratio remained at last year’s level.


Positive net new money inflow

Net new asset growth in private banking outperformed the comparable period last year to reach CHF 399 million. The bank is thus well on its way to achieving its stated goal of one billion francs in annual net new money starting in 2008. Client assets under management (excluding custody services) amounted to CHF 33.8 billion overall at the end of June 2006, compared to CHF 38.7 billion at the end of 2005, a difference to be ascribed principally to the sale of Banca del Gottardo (Monaco). The volume of custody business, which is not counted as client assets under management and comprises in the main funds held for Swiss Life, increased by CHF 4.1 billion during the reporting period to reach CHF 42.1 billion at the end of June 2006 (+11%). Total assets under control thus amounted to CHF 75.9 billion.


Ratings confirmed – bank’s individual rating to be discontinued

In the course of its regular review Standard & Poor's confirmed its long-term BBB+ rating and short-term A-2 credit rating for Banca del Gottardo, citing among other factors the latter’s solid business and improved asset quality. Following its decision to steadfastly focus on private banking - which makes an individual rating no longer necessary - and as a wholly-owned subsidiary of Swiss Life Holding, the bank will no longer require a rating of its own.


Strategic reorientation

The bank’s strategic reorientation is proceeding successfully and according to plan. Since October 2005, when it announced its decision to focus on private banking in its core markets of Switzerland and Italy, a new organisational structure has been introduced and most key positions have been filled. In addition Banca del Gottardo has already implemented or introduced the following measures:

- Creation of a Products & Services division to provide support for private banking front-office areas in product development, marketing, sales support and Wealth Management Advisory
- Comprehensive programme to enhance private banking with expanded service offering, new IT tools and considerable investment in development and further training of client advisors
- Analysis of current product range, definition of bank's core offering and meticulous implementation of principles of open product architecture
- Grouping of existing retail banking business within one centralised team; introduction of
needs-based product standards as well as appropriate pricing
- Reorientation of credit business in accordance with new strategic criteria (e.g. combination with private banking relationship, risk-adjusted pricing)
- Service optimisation and enhancement of Banca del Gottardo’s market presence and brand positioning

CEO Rolf Aeberli: “The measures we have initiated, which are due to be concluded by the end of 2006, are beginning to show tangible effects, meaning we now expect a solid result for the year as a whole even if market volatility should increase.”

Attachment: Key Figures of Balance Sheet and Income Statement for the first half of 2006

Banca del Gottardo’s 2006 fiscal year result will be announced on 2 March 2007.

Contact:
Banca del Gottardo
Media Relations: Franco Rogantini
Tel. +41 91 808 33 60
Fax +41 91 923 94 33
Viale S. Franscini 8
6901 Lugano
franco.rogantini@gottardo.com

Banca del Gottardo, with head office in Lugano (Switzerland), is a company of the Swiss Life Group, a leading provider of pensions and life insurance in Europe. The Bank has a well expanded national and international network. With subsidiaries, branches and representative offices in Zurich, Geneva, Lausanne, Bellinzona, Chiasso, Locarno, Bergamo, Milan, Rome, Treviso, Turin, Athens, Luxembourg, Madrid, Paris, Hong Kong and Nassau (Bahamas). Banca del Gottardo is positioned to offer top-of-the-line global financial services, delivered by a team of highly qualified specialists to its local and international clientele.
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