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Vontobel Aims At Sharper Profitability; Logs Strong H1 Result

Tom Burroughes

27 July 2018

Zurich-listed , which reported a 31 per cent year-on-year rise in profits for the first six months of 2018, raised its profitability targets for wealth management today, aiming to tighten its cost/income ratio to 70 per cent from 75 per cent.

Group net profit grew SFr132.7 million ($133.4 million), up from SFr101.5 million in the first six months of 2017, it said today. 

The strongest driver of earnings came from asset management, delivering pre-tax income of SFr92.5 million (first half of 2017: SFr69.5 million). The combined wealth management arm, comprising wealth management and the external asset managers business, brought in a 46 per cent jump in pre-tax profit of SFr56.2 million. The financial products business generated another pre-tax profit of SFr51.9 million (first half of 2017: SFr51.5 million). 

The past few months have seen Vontobel acquire Notenstein La Roche Privatbank, a move that led it to announce its aim to boost wealth management profitability. This acquisition is an example of the kind of industry consolidation affecting Swiss and other countries’ wealth management markets. The 2020 profit targets that apply to Vontobel as a whole have increased. It aims to achieve a cost/income ratio of less than 72 per cent (previously 75 per cent) and a return on equity of more than 14 per cent (previously 12 per cent).

Vontobel generated a net inflow of new money of SFr5.1 billion in the first half of 2018. Client assets reached a new record level of SFr253.6 billion, compared to SFr246.5 billion at the end of 2017.

The organisation said its capital buffer is strong: the BIS common equity tier 1 ratio – a common measure of banks’ financial strength - was 19.1 per cent, but contract 12 per cent after the Notenstein acquisition.