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Group result up 13% to CHF 67.8 million - Operating income 10% higher at CHF
364.5 million - Net new money growth still strong at CHF 3.9 billion (+8% p.a.)
- Total assets under management CHF 101.6 billion - Gross margin slightly
improved in Private Banking
Net new money growth on target - Assets under management above the CHF 100
The Sarasin Group once again produced a strong acquisition performance, with net
new money growth of CHF 3.9 billion. Despite the negative effects of market
performance, these new money inflows allowed the bank to keep its assets under
management above the CHF 100 billion mark during the entire reporting period.
Total assets under management stood at CHF 101.6 billion on 30 June 2011
(31.12.2010: CHF 103.4 billion). The geopolitical unrest and the tragic events
in Japan, along with the accentuation of the euro crisis and the fall of the US
dollar combined with concerns about America's budget deficit, impacted heavily
on international stock markets, currency exchange rates and investor sentiment.
Client assets managed by the Sarasin Group were therefore negatively affected
not only by market performance (CHF -1.8 billion) but also by currency
translation effects (CHF -3.9 billion).
Revenues increased despite the adverse climate
Sarasin Group increased its operating income by 10% to CHF 364.5 million
compared to the same period last year (1H 2010: CHF 332.6 million). The
performance of the individual revenue streams varied: net interest income was
slightly up on the previous year (+1%) at CHF 75.0 million. Income from
commission and service fee activities benefited from the higher asset base and
was 6% higher than in 1H 2010 at CHF 232.0 million. The strong impact of equity
markets and exchange rate movements during the reporting period explains the 3%
decrease in income from commission and service fee activities when compared with
the second half of 2010. Income from trading operations, which came under
pressure this time last year as a result of hedging transactions, doubled to CHF
51.1 million (1H 2010: CHF 23.2 million), reverting to its normal level. Other
ordinary income was lower than the first half of 2010 at CHF 6.4 million, due to
lower returns on the bank's own investments (1H 2010: CHF 15.8 million).
Christoph Ammann, Chairman of the Board of Directors of Bank Sarasin & Co. Ltd
"No matter what the macroeconomic conditions, our Group is intent on
consistently following its highly focused business strategy. This concentrates
on our core business of Private Banking, on selected international core markets
and on bespoke investment solutions. The combination of our two strategic core
values, Sustainability and Swiss Private Banking, differentiates our bank
clearly from the competition."
Joachim H. Straehle, CEO of Bank Sarasin & Co. Ltd
"In an environment overshadowed by momentous events, we have nonetheless managed
to produce a solid result: we are pleased with our consistently strong net new
money growth, the higher level of income and the slight improvement in the gross
margin of the core business. But we will strive to achieve an even greater
improvement. Our focus is also on implementing farsighted initiatives for the
future - particularly our strategy for avoiding non tax-compliant assets. By
consistently applying this policy, we intend to achieve our goal of being rid of
all non tax-compliant client assets by the end of 2012."
Investments in growth initiatives continue, with only moderate impact on costs
During the reporting period the Sarasin Group´s operating expenses rose 8% to
CHF 261.8 million (1H 2010: CHF 242.6 million). This rise was due to higher
personnel expenses, which increased by 11% to CHF 194.2 million (1H 2010: CHF
175.6 million) in response to a 7% rise in the average headcount as well as
regular salary adjustments and higher provisions for bonuses. A comparison to
the second half of 2010 shows a much smaller increase (+1%).
Despite the expansion of existing locations and the opening of two new offices -
one in Switzerland (Lucerne) and one in Germany (Cologne) - general
administrative expenses were only 1% higher than the previous year, finishing at
CHF 67.6 million (1H 2010: CHF 67.0 million). The defining elements of the
bank's cost management are clear control and a focus on the essentials. General
and administrative expenses were in fact 3% lower than in H2 2010. There was a
rise of 16% in depreciation & amortisation due to investments in the Avaloq
platform for Asia and additional IT investments in important bank projects.
Gross margin improved in Private Banking - repositioning of bank zweiplus
Despite the challenging investment environment and significant exchange rate
effects, the gross margin in the core business of Private Banking improved
slightly. The gross margin at Group level was unchanged. The contribution to
earnings made by bank zweiplus was much lower than in the same period last year.
Apart from negative currency translation effects, there was also a steep decline
in new business with distribution products in Germany. bank zweiplus is
repositioning its business with direct clients as of 2012 under the "Cash" brand
name, as part of a joint venture with Ringier. This should enable the direct
client business to revert to a growth path.
Group result increases - capital base is still strong
The cost income ratio was slightly better than last year at 76.4% (1H 2010:
77.3%). The Sarasin Group's net profit rose to CHF 67.8 million, a 13% increase
on the same period last year (1H 2010: CHF 60.1 million). This reflects a solid
business performance in the first half of 2011. Shareholders' equity amounted to
CHF 1.3 billion, unchanged from the level at the end of 2010. Due to the growth
of the business and exchange rate movements, the bank's equity ratio at the end
of June 2011 fell to 6.9% (31.12.2010: 7.3%). The BIS Tier 1 ratio, defined as
core capital as a percentage of risk-weighted assets, eased slightly to 14.5% on
30 June 2011.
The Sarasin Group holds no Greek, Irish or Portuguese sovereign bonds on its
books, and only minimal amounts of Italian and Spanish sovereign bonds.
Furthermore, it has no loans outstanding to Greek, Portuguese or Spanish banks
and only has a very small credit exposure to Italian and Irish banks.
Outlook for 2H 2011: Targets unchanged - focus on future-oriented initiatives
Despite the distinct and persistent uncertainty pervading the stock markets, the
Sarasin Group remains cautiously optimistic for the second half of 2011. The
targets set have not changed: the bank wants to continue to increase its
revenues and improve cost efficiency. At the same time the Sarasin Group will
concentrate on implementing various projects and initiatives to ensure its
future direction. This includes first and foremost the implementation of the
Sarasin Group's strategy of avoiding non tax-compliant assets: by the end of
2012, the bank wants to be free of all non tax-compliant client assets. In order
to implement this policy across the entire group, the bank has set up
appropriate processes designed to clarify the tax status of international
clients who use Switzerland as a booking centre. This does not affect Swiss
private clients, because of the duty of self-declaration for all Swiss taxpayers
and Switzerland's system of withholding tax.
The Sarasin Group will continue to take full advantage of the broad geographical
diversification of its business across international growth markets and pursue a
selective marketing approach: apart from Switzerland, the Sarasin Group also
targets selected markets in Europe, the Middle East and Asia. As part of its
focused growth strategy, a sixth Swiss location was opened in Lucerne in July
2011 and a fourth German office in Cologne. There are currently no plans to
break into new markets in the medium-term. Instead, the bank intends to exploit
its full potential in existing markets and thus ensure a cost-efficient
approach. Depending on the market in question, the Sarasin Group delivers its
investment solutions either on an onshore and/or cross-border basis.
Cross-border business requirements, along with its strategy for avoiding non
tax-compliant assets, allow the Sarasin Group to operate in markets where it is
permitted to do so subject to local regulations and legal conditions.
The Half Year Report 2011 of Bank Sarasin & Co. Ltd can be downloaded as of
today, 28 July 2011, 7.00 a.m. from www.sarasin.com.
Further inquiry note:
Dr. Benedikt Gratzl
Head Corporate Communications
T.: +41(61) 277 70 88
end of announcement euro adhoc
issuer: Bank Sarasin + Cie AG
phone: +41(61)277 77 77
FAX: +41(61) 272 02 05
indexes: SPIEX, SPI ex SLI
stockmarkets: official dealing/general standard: SIX Swiss Exchange