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EANS-Adhoc: Bank Sarasin + Cie AG
Half Year Results 2012 of Bank Sarasin & Co.
Structural pressure on earnings calls for a cautious approach
-------------------------------------------------------------------------------- ad-hoc disclosure transmitted by euro adhoc with the aim of a Europe-wide distribution. The issuer is solely responsible for the content of this announcement. -------------------------------------------------------------------------------- 6-month report 30.07.2012 Positive net new money inflow of CHF 0.5 billion - assets under management rise to CHF 99.1 billion - lower asset base and cautious client investment activity reduce operating income by 9% to CHF 330.3 million - decline of 29% in group result to CHF 48.2 million - medium-term goals under review Eurozone debt crisis escalation in the second quarter of 2012 did not entirely eclipse the first quarter's positive momentum in financial markets: equity markets finished the first half of the year in positive territory overall, with interest rates remaining at record lows. As a result, market performance made a positive contribution of CHF 1.9 billion to the Sarasin Group's asset base. A slight weakening of the Swiss franc, especially against the US dollar, added positive currency translation effects of CHF 0.3 billion. The Sarasin Group achieved positive net new money growth of CHF 0.5 billion. At the end of June 2012, client assets managed by the Sarasin Group amounted to CHF 99.1 billion. Income down in response to reduced asset base and cautious client investment activity The Sarasin Group's operating income was 9% lower than the prior-year figure, at CHF 330.3 million. On the one hand, the revenue trend reflects cautious client investment activity, due largely to growing uncertainty created by the escalation of the eurozone debt crisis. On the other hand, the average client assets on which Sarasin's business performance and revenues are based were significantly below the prior-year level. Income from commission and service fee activities declined by 13% to CHF 202.3 million. Net interest income was more robust, but still fell by 6% to CHF 70.3 million. Income from trading operations amounted to CHF 46.1 million (-10%). Ordinary trading activities on behalf of clients along with income from trading in structured products were lower. Other ordinary results rose to CHF 11.6 million from the sales proceeds of financial investments. Joachim H. Straehle, CEO of Bank Sarasin & Co. Ltd "The Sarasin Group's financial performance for the first half of 2012 reflects the macroeconomic environment. In addition, the implementation of our strategy focusing on tax-compliant assets was of particular importance for us in the reporting period. After completion of its implementation the Sarasin Group will be in an even stronger position for the future. With Safra as a new, well-capitalised majority shareholder, Bank Sarasin is assured financial and operational stability." Lower expenses despite expansion of workforce and locations The Sarasin Group's operating expenses were 1% lower than in the first half of 2011, finishing at CHF 259.1 million. Personnel expenses were unchanged at CHF 194.3 million during the reporting period. The headcount increased by 16 since beginning of the year. General administrative expenses were 4% lower, at CHF 64.7 million. The expansion of new locations - along with the extension of various activities at existing locations - was more than offset by cost savings in other areas. Depreciation and write-offs decreased by 5% to CHF 15.9 million as a number of charges on various IT investments ended. The figure for value adjustments, provisions and losses was CHF 1.0 million. Capital strength unchanged - decline in group result Due to declining revenues, the cost income ratio increased to 83.3% (1H 2011: 76.4%). The group result was 29% lower, at CHF 48.2 million, but was still higher than the adjusted figure for the second half of 2011. At CHF 19.3 billion, the total assets carried on the balance sheet of the Sarasin Group were 10% higher than at the end of 2011. The Bank's liquidity was further improved. Cash and cash equivalents increased from CHF 192 million to CHF 1.4 billion. There was only a modest increase of CHF 29 million in loans to clients. The net profit for 2011 has been allocated to the profit brought forward, which resulted in a rise in shareholders' equity to CHF 1.4 billion. The equity ratio was virtually unchanged at 7.0% on 30 June 2012 (31.12.2011: 7.2%). The BIS Tier 1 ratio, defined as core capital as a percentage of risk-weighted assets, comes to 15.5% on 30 June 2012. Consistent implementation of the strategy for avoiding non tax-compliant assets Bank Sarasin is working hard to implement its strategy for avoiding non tax-compliant assets and intends to terminate dealings with any client for whom the Tax Due Diligence Process cannot be completed before the end of 2012 or who refuses to handle their assets in accordance with the tax rules applicable in their country of domicile. For existing international clients of Bank Sarasin in Switzerland, a comprehensive process is being introduced whereby the Bank analyses the tax situation of the assets deposited by the client. The Process was first developed and defined for Booking Center Switzerland in 2011 and has been in place ever since. Various clearly defined groups of clients are suspended from the Tax Due Diligence Process: the Process does not affect private clients domiciled in Switzerland, because of the duty of self-declaration for all Swiss taxpayers, and a withholding tax. In addition, Bank Sarasin has decided - in light of various amendments initiated at political level - to exclude from the Process any client domiciled in a country with which Switzerland has negotiated a double taxation agreement that provides for a final withholding tax, or which has recently initiated tax negotiations in this area. If the agreements do not come into force, these clients will be subject to the Tax Due Diligence Process in accordance with Bank Sarasin's strategy for avoiding non tax-compliant assets. Outlook for 2H 2012: cost-cutting measures introduced, medium-term goals under review After the difficult business performance in the first quarter of 2012, the Management has already introduced an initial package of immediate cost-cutting measures. On the general administrative expenses front, budgets were cut. New CRMs will still be recruited in order to acquire new clients, while at the same time improving efficiency in all areas of the Group. Given this backdrop, the Board of Directors and the Management will be reviewing the existing medium-term goals. With investors still standing on the sidelines, the Sarasin Group expects new money growth to remain positive, but at a slightly slower pace than in previous years. The Half Year Report 2012 of Bank Sarasin & Co. Ltd can be downloaded from www.sarasin.com from 7 a.m. onwards on 30 July 2012. Further inquiry note: Dr. Benedikt Gratzl Head of Corporate Communications T: +41(61) 277 70 88 Benedikt.Gratzl@sarasin.ch end of announcement euro adhoc -------------------------------------------------------------------------------- issuer: Bank Sarasin + Cie AG Elisabethenstrasse 62 CH-4002 Basel phone: +41 (61) 277 77 77 FAX: +41 (61) 272 02 05 mail: firstname.lastname@example.org WWW: www.sarasin.ch sector: Banking ISIN: CH0038389307 indexes: SPIEX, SPI ex SLI stockmarkets: official dealing/general standard: SIX Swiss Exchange language: English