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EANS-Adhoc: 1H 2010 results of Bank Sarasin & Co. Ltd: Bank Sarasin sustains dynamic pace of growth
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6-month report/1H 2010 results
Net new money growth strong at CHF 6.4 billion (+14% p. a.) - Total assets under management CHF 96.2 billion nearing CHF 100 billion target - Net profit up 11% to CHF 60.1 million - Operating income 6% higher at CHF 332.6 million - Targets remain unchanged, focus on ability to generate returns
Successful growth strategy reflected in net new money - assets under management growth on track Bank Sarasin has succeeded in sustaining its dynamic pace of growth with net new money inflows of CHF 6.4 billion. This corresponds to an annualised growth rate of 14%. Boosted by this strong business performance, clients´ assets under management increased to CHF 96.2 billion on 30 June 2010 from CHF 93.7 billion as of 31 December 2009. The assets managed by the Sarasin Group according to sustainable investment criteria were 4% higher than at the end of last year, at CHF 12.4 billion (31.12.2009: CHF 11.9 billion). Based on this strong result, Sarasin is confident of being able to achieve the full-year target for 2010 of net new money growth of 10% or CHF 9.4 billion. The negative impact of market performance and currency translation effects reduced total assets under management by CHF 3.2 billion.
Solid earnings level despite lower income from trading operations During the reporting period the Sarasin Group generated operating income of CHF 332.6 million, an increase of 6% on the same period last year (1H 2009: CHF 315.1 million). This increase reflects the expansion of the business base as part of Sarasin´s continuing growth strategy: income from commission and service fee activities rose by 28% to CHF 218.9 million, while net interest income increased by 10% to CHF 74.5 million due to the expansion of the credit business associated with private banking. Income from trading operations fell sharply by 63% to CHF 23.2 million (1H 2009: CHF 62.8 million). Income from ordinary trading operations - both on behalf of clients and on the Bank's own account - as well as income from the structured products business remained broadly flat on last year, whereas there was a sharp drop in income in the Bank's own financial investments and in the treasury business as a result of hedging transactions against rising interest rates. Other ordinary income increased by 13% to CHF 15.8 million thanks to realised capital gains on the Bank´s own financial investments.
Rise in costs remained moderate, despite success in growth initiatives During the reporting period operating expenses rose 5% from CHF 230.3 million to CHF 242.6 million. Personnel expenses rose 4% to CHF 175.6 million (1H 2009: CHF 168.5 million) due to the increase in headcount and general salary adjustments. General administrative expenses rose 8% to CHF 67.0 million (1H 2009: CHF 61.8 million). The increase in costs was therefore modest taking into account the continuing expansion of Sarasin´s team of relationship managers and its investments in the ongoing growth strategy - notably the opening of a third location in Germany (Nuremberg) and offices in Poland (Warsaw), Austria (Vienna) and India (Mumbai and New Delhi) as well as the preparatory work required for the roll-out of the Avaloq banking software in Asia. The decision to close down locations in Spain and to replace unsatisfactory client advisors is evidence of Sarasin´s commitment to continuously review its business cases and adjust accordingly.
Net profit improves - capital base still solid The cost income ratio was virtually unchanged from last year at 77.3% (1H 2009: 77.5%). Sarasin´s net profit of CHF 60.1 million confirms the strong first-half result and represents an increase of 11% on the same period last year (1H 2009: CHF 53.9 million). Shareholders' equity amounted to CHF 1.2 billion, virtually unchanged from the end of 2009. Due to the growth of the business, the Bank´s equity ratio at the end of June 2010 dipped to 7.4% (30.12.2009: 8.4%). The BIS Tier 1 ratio, defined as core capital as a percentage of risk-weighted assets, remained stable at 16.3% at the end of June 2010.
Christoph Ammann, Chairman of the Board of Directors of Bank Sarasin & Co. Ltd "The first-half results for 2010 show that our strategy is paying off in the long term and that our management is successfully targeting our growth initiatives towards the most attractive markets. Furthermore, the proportion of undeclared assets deposited with the Bank is negligible, which gives us significant advantages in the mid-term. No matter what happens on the regulatory front, we are striving for being rid of any undeclared client assets by the end of 2012."
Joachim H. Straehle, CEO of Bank Sarasin & Co. Ltd "The consistently high net new money inflows reflect Sarasin´s strong growth dynamic and testify to the quality of our CRM team and the Bank's excellent reputation. By selectively expanding our network of locations and our CRM team, we have steadily strengthened our position in core international markets. The fact that we also managed to boost our revenues - despite the drop in income from trading operations - is very encouraging as well. Despite this improvement in income, we will focus on a further long-term improvement in both our earnings power and gross margin."
Outlook for 2H 2010: Targets unchanged - focus remains on ability to generate returns Bank Sarasin expects the global economy to slow down in the second half of 2010. Weaker macroeconomic data and the disappearance of fiscal stimulus measures could act as a curb on growth. Even so, Bank Sarasin stands by its quantitative targets up to the end of 2010: net new money growth of 10% and assets under management totalling CHF 100 billion and should achieve the latter goal as long as financial markets remain stable. The Bank´s main priority will be to strengthen its ability to generate returns and improve its gross margin. Bank Sarasin also intends to expand further its CRM team as part of its ongoing growth strategy. When implementing all these initiatives, Bank Sarasin will always take a selective, profit-oriented approach.
Bank Sarasin is already well diversified in geographical terms and in the future intends to focus more intensely on core markets that offer good growth potential. The Bank's focus is on selected individual markets in European countries such as Germany, and in the growth markets of the Middle East and Asia. Bank Sarasin is also planning to boost its presence in the Middle East by opening offices in Bahrain and Abu Dhabi. The Bank also expects to reap positive benefits from its recent entry into the Indian market and the banking licence granted to its Hong Kong branch in the first half of 2010 and plans a similar upgrade of its banking licence in Singapore.
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ots Originaltext: Bank Sarasin + Cie AG
Im Internet recherchierbar: http://www.presseportal.ch
Further inquiry note:
Dr. Benedikt Gratzl
Head Corporate Communications
T.: +41(61) 277 70 88
Index: SPIEX, SPI ex SLI
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