Financial Results

Weaker Markets Cut Vontobel's AuM, Earnings

Editorial Staff 9 February 2023

Weaker Markets Cut Vontobel's AuM, Earnings

The firm pointed out that the AuM figure had fallen from what had been a record in 2021. It reiterated its strategy and talked of moves such as strengthening wealth management business in the US for clients seeking international exposures.

Vontobel, the Swiss wealth management house, yesterday announced that its after-tax profit fell to SFr229.8 million ($249.6 million) from SFr383.8 million in what was a record year of 2021. On a pre-tax basis, profit fell to SFr267.4 million from SFr467 million, the Zurich-listed firm said.

Slides to global equity and bond markets last year took their toll, encouraging clients to sit on their hands rather than make new investments, Vontobel said. As a result, clients pulled out from the market, causing a 7.4 per cent outflow in the asset management business, and on a net basis, last year saw an outflow of 2.1 per cent in 2022 from the previous year. 

Assets under management fell by 16 per cent to SFr204.4 billion, it said.

In the wealth management segment, Vontobel said it recorded net new money growth of 5.6 per cent, within its expected target range.

The firm said it logged “satisfactory” returns on equity of 11.2 per cent, considering the tough market backdrop. Its Common Equity Tier 1 ratio, a typical industry benchmark of capital buffer, was 16.7 per cent at the end of last year. The firm proposed to pay an unchanged dividend of SFr3 per share.

Vontobel said that a number of cost controls have been introduced; adding that “gross cost reductions” of SFr65 million are expected to be made by the end of 2023. Operating expense decreased by around SFr51 million to SFr1.018 billion (2021: SFr1.068 billion), equating to a year-on-year fall of 5 per cent.

Outlining its strategy, Vontobel said it aims to “offer an even more diversified range of future-proof investment solutions and will therefore further enhance the quality of its investment expertise in the coming years – especially in the area of equity products, with a particular emphasis on ESG, Impact and Thematics.” The firm said it will also form partnerships to “give wealth management and digital investing clients access to private market investments in the future – thus also providing those clients with additional opportunities for diversification.”

The firm said that it also wants to maintain its “strong growth” in the US, and increase its institutional business with global banks in the US and its business with North American wealth management clients seeking an account in Switzerland for diversification purposes. 

“Vontobel anticipates that 2023 will be another challenging period with numerous imponderables, even if markets recovered somewhat in the first few weeks of the year. Geopolitical risks, supply chain issues, high energy prices, inflation and a looming recession will continue to impact the economy – and therefore also investors – for the foreseeable future,” it added.

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