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EANS-Adhoc: Bank Sarasin + Cie AG
Annual results 2009 of Bank Sarasin & Co.
Ltd: Bank Sarasin´s growth strategy still successful
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Annual results 2009 of Bank Sarasin
Assets under management climb to new peak of CHF 93.7 billion (+34%) - Net new money growth CHF 12.5 billion (+18%) - Operating income improves 8% to CHF 673.9 million - Adjustment to the valuation of Sarasin´s financial interest in NZB Holding - Adjusted net profit of CHF 121.7 million improved by 6% - Dividend increased from CHF 0.65 to CHF 0.90
Strong acquisition performance - assets under management climb to a record high The strong acquisition performance led to net new asset inflows of CHF 12.5 billion in the financial year 2009, an increase of 18% based on the assets at 31 December 2008. Sarasin therefore managed to comfortably beat the net new money target of +10% or CHF 7 billion originally set for 2009. The increase in assets under management was boosted by market performance and currency translation effects totalling CHF 11.9 billion. The expert appraisal of financial markets by Bank Sarasin´s Research team, which ensured a timely and significant expansion of the equities quota, resulted in a stronger than average performance in the Bank´s mandates. During the reporting period, the total assets under management of the Sarasin Group reached a new record, rising from CHF 69.7 billion to CHF 93.7 billion on 31 December 2009.
Stronger operating performance in 2H 2009 Sarasin Group´s operating income increased 8% to CHF 673.9 million (2008 adjusted: CHF 626.5 million). After a difficult start to 2009, with stock markets remaining depressed in the first quarter, Bank Sarasin´s earnings performance improved significantly over the rest of the year. Income from commission and service fee activities, which accounts for approximately 60% of the Bank´s total revenues, rose sharply in the second half of the year to CHF 228.0 million (1H 2009: CHF 170.5 million) and finished the full financial year at CHF 398.5 million, roughly the same level as 2008 (CHF 399.0 million).
Christoph Ammann, Chairman of the Board of Directors of Bank Sarasin & Co. Ltd "Our solid performance in 2009 was driven by our low-risk business model as well as the systematic implementation of our growth strategy. The backing of our AAA-rated majority shareholder Rabobank, our own capital strength and Sarasin´s sustainable business strategy inspire great confidence in our clients and shareholders. This winning combination is invaluable in uncertain times such as these."
Joachim H. Straehle, CEO of Bank Sarasin & Co. Ltd "The impressive rate of growth we have achieved over the past two years makes me confident of managing client assets in excess of CHF 100 billion as early as the second half of 2010, as long as markets remain relatively stable. Given this backdrop, our main focus in 2010 is not to further accelerate our pace of growth, but to achieve a sustainable improvement in profitability."
Successful cost management Thanks to strict cost management, total operating expenses during the reporting period only rose by 5% to CHF 486.8 million (2008: CHF 464.7 million). Stringent cost discipline helped to reduce general administrative expenses by 9% to CHF 128.0 million (2008: CHF 140.6 million). Personnel expenses were 11% higher at CHF 358.8 million (2008: CHF 324.2 million), which was less than the 14% increase in the average headcount. The cost income ratio (ratio of operating expenses including depreciation and amortisation to operating income) was virtually unchanged at 77.1% (2008 adjusted: 77.9%).
Adjustment to the valuation of the financial interest in NZB Holding As part of its restructuring and reorientation, NZB Holding intends to continue to pursue the existing entrepreneurial model with a 60% shareholder pool made up of new shareholders from the circle of both existing and new employees and members of its Board of Directors. As a result, Bank Sarasin no longer plans to increase its shareholding in NZB to a majority stake. Bank Sarasin will retain its 40% financial investment in NZB Holding. Both banks will continue to operate totally independent of one another. In accordance with the principle of prudence, Bank Sarasin has adjusted the value of its 40% financial interest in NZB Holding and written down its value by CHF 70.2 million. To facilitate a comparison of Bank Sarasin´s operating performance, the annual figures have been adjusted to allow for this non-recurring effect.
The Sarasin Group´s adjusted operating profit increased 6% to CHF 121.7 million (2008 adjusted: CHF 114.4 million). Sarasin therefore exceeded its target of equalling last year´s adjusted operating result. Taking into account the one-off write-down, Bank Sarasin´s group result comes to CHF 51.5 million (2008: CHF 106.8 million).
Assets managed according to sustainable principles double to CHF 11.9 billion Apart from investing in future growth, another key element of Sarasin´s strategy is sustainability. There is enormous demand for sustainable investments and for portfolio management mandates based on sustainable criteria. The financial crisis has clearly demonstrated to private and institutional clients the added value that sustainability insights can produce. The capital market is sending out a strong signal that sustainable companies are considered to be more creditworthy. Around an eighth of Sarasin´s assets under management are currently invested according to sustainable principles. In the space of just a year they have doubled to CHF 11.9 billion (2008: CHF 6.0 billion). Their strong growth is partly attributable to the decision to switch the asset management mandates of Swiss private clients to a sustainable investment style, and was also boosted by newly acquired mandates and inflows to Sarasin sustainable investment funds.
Sarasin Asset Management: focus, discipline and prudence once again recognised in 2009 In addition to sustainable investments, the other two investment styles which Sarasin specialises in - thematic and quantitative asset management - also reached a new peak in their business growth in 2009. This momentum reflects the strength of Sarasin´s position, which was highlighted in three ways: through high net asset inflows, superior investment performance and international recognition in the form of a series of industry awards. Sarasin´s flagship investment funds and discretionary mandates returned impressive absolute and relative performances. 99% of all Sarasin´s investment products delivered positive returns and more than half of them generated double-digit returns.
Capital base still solid Thanks to the exercising of Cash or Title Options and the net profit in 2009, shareholders´ equity rose CHF 98.5 million (8%), from CHF 1,193.2 million at the end of 2008 to CHF 1,291.7 million on 31 December 2009. Because of the sharp increase on the customer side of the balance sheet, the equity ratio dropped to 8.4% on 31 December 2009 (2008: 9.4%). The BIS Tier 1 ratio, defined as core capital as a percentage of risk-weighted assets, improved from 15.2% in 2008 to 16.3% at year-end 2009. Confidence in Bank Sarasin is also strengthened by the backing of its majority shareholder Rabobank with its AAA-rating from the leading international credit rating agencies Moody's and Standard & Poor's.
Proposals to the Annual General Meeting The terms of office of the directors Christoph Ammann, Hubertus Heemskerk and Sipko N. Schat are due to end at the Annual General Meeting of 27 April 2010. Christoph Ammann and the two members delegated by the majority shareholders Rabobank, Hubertus Heemskerk and Sipko N. Schat, will be proposed for re-election to the Board of Directors. The Board of Directors is proposing a dividend of CHF 0.90 per class B registered share.
Outlook: assets under management of CHF 100 billion is achievable in 2010 In the 2009 financial year, Bank Sarasin slightly curbed investment in future growth. In 2010 the Bank plans to return to its previous mid-term level of investment and continue to further expand its team of client relationship managers. In the financial year 2010, Bank Sarasin intends to maintain its pace of growth with net new money inflows of 10%. When it comes to the new standards governing mutual international assistance in tax matters in accordance with the new double taxation agreements which Switzerland intends to sign with numerous foreign countries, Sarasin enjoys an excellent position: not only does the Bank have a strong degree of international diversification, but any outflows of client deposits are likely to be very small. Thanks to the revenue boost provided by an increase in the average level of client assets, Sarasin expects a further improvement in the operating result. The Bank´s top priority in 2010 is to achieve a lasting improvement in profitability.
Bank Sarasin intends to strengthen its business base in the Asian growth markets over the next 18 months: the Hong Kong office has recently received a banking licence and will soon be upgraded to Bank Sarasin´s first international branch. In addition, Sarasin plans to roll out its IT banking system Avaloq, which has been successfully used in Switzerland since July 2003, in its Hong Kong and Singapore locations.
New mid-term goals 2015 Bank Sarasin´s Board of Directors has set the following mid-term goals for 2015: To increase assets under management to CHF 150 billion (performance-adjusted) by 2015. To significantly improve the gross margin, despite the tough competition - and the higher margin pressure that comes with it. Finally, to continue to bring down the cost income ratio substantially by means of further efficiency improvements. In geographical terms, growth initiatives will be concentrated on the three main target markets of Europe, the Middle East and Asia. As a sustainable bank, Sarasin is pursuing long-term profitable growth which is built on quality and can be achieved without running up excessive costs.
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ots Originaltext: Bank Sarasin + Cie AG
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Dr. Benedikt Gratzl
Head Corporate Communications
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