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EANS-Adhoc: Annual results 2010 of Bank Sarasin & Co. Ltd: Assets under management pass the CHF 100 billion mark
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Assets under management climb to CHF 103.4 billion - Strong net new money growth of CHF 13.4 billion (+14%) - Dynamic growth and improved quality of earnings in the core business Private Banking - Group result reaches CHF 124.5 million - Dividend unchanged at CHF 0.90
Growth target beaten: AuM exceed CHF 100 billion thanks to strong net new money growth The assets under management target of CHF 100 billion, set in 2006 when formulating the Bank's growth strategy, has been comfortably beaten, at CHF 103.4 billion. This success was driven mainly by consistently high new money inflows of CHF 13.4 billion, which correspond to an annualised growth rate of 14%. Sarasin has therefore again comfortably beaten its annual net new money target set at CHF 9.4 billion (+10%) for 2010. Thanks to a stable second half of the year the performance was positive at CHF 4.7 billion. The strong Swiss franc during the same period produced a negative currency translation effect of CHF 7.7 billion.
Better quality of earnings in the core business During the reporting period the Sarasin Group generated strong operating income of CHF 690.6 million (2009: CHF 673.9 million). This increase is based on an improvement in the quality of earnings in the core business: there was a sharp increase in both net interest income, at CHF 146.9 million (+12%), and in income from commission and service fee activities at CHF 457.5 million (+15%). Income from trading operations fell sharply by 42% to CHF 59.8 million, with other ordinary income also dropping 36% to CHF 26.3 million. While order volumes remained virtually constant in trading activity for clients, the hedging transactions undertaken by the Bank in the first half of 2010 against rising interest rates had a damaging effect on trading revenues. Foreign currency effects also had a negative impact on the result.
Christoph Ammann, Chairman of the Board of Directors of Bank Sarasin & Co. Ltd "Bank Sarasin continues to pursue its growth strategy. There are many other areas in which we have established a profile as sector leader, thereby shaping the future orientation of our business model: examples include being one of the first banks in Switzerland to introduce MiFID standards (Markets in Financial Instruments Directive) for all our Swiss clients, as well as the fact that we have already met the stringent capital adequacy requirements set by Basel III. Last year we also decided to focus in future on the acquisition and management of declared client assets. No matter what happens on the regulatory front, our goal is to be rid of any undeclared client assets by the end of 2012."
Joachim H. Straehle, CEO of Bank Sarasin & Co. Ltd "Passing the CHF 100 billion mark in the assets that we manage is an important milestone, setting a new record in our bank's history and delivering on the target that we set back in 2006. This success fills us with a strong sense of pride. In particular, the improved quality of earnings in our core business shows exactly where we set our priorities. Further improving our profitability continues to be one of our key tasks. We continue to vigorously pursue our goal of establishing Sarasin as a leading Swiss sustainable private bank with a strong, independent brand in all our target growth markets." Selective growth initiatives implemented at moderate expense Operating expenses rose 4% in 2010 to CHF 505.2 million (2009: CHF 486.8 million). Personnel costs increased by 3% to CHF 368.4 million (2009: CHF 358.8 million). As part of the ongoing growth strategy pursued by the Sarasin Group, the headcount was increased by 5% to 1 642 (2009: 1 557). In particular, both the mid and back office functions were strengthened. There was only a small net increase in the number of client relationship managers (CRMs). The target figure of around 50 additional CRMs per year was achieved in gross terms in 2010. Sarasin has once again focused on optimising the quality of its client advisors. General administrative expenses increased by 7% to CHF 136.8 million due to various additional costs: investments in two new locations in the Middle East, the rollout of Avaloq successfully completed in January 2011 at the two Asian locations in Hong Kong and Singapore, and the expansion of Sarasin's international marketing activities. The cost income ratio (ratio of operating expenses incl. depreciation and amortisation to operating income) was virtually unchanged at 77.6% (2009 adjusted: 77.1%).
Core business of Private Banking gathers momentum The Sarasin Group continues along its growth path in its core business of Private Banking. This is reflected in the sharp increase in the 2010 result for the Private Banking segment: the figure of CHF 94.5 million was three times higher than the previous year (2009 adjusted: CHF 30.2 million). This increase was mainly down to a substantial volume-driven increase in revenues to which the locations in every region contributed. There was also a 20% improvement in the result reported by the Asset Management, Products & Sales segment, at CHF 60.0 million, while the Trading & Family Offices segment suffered from falling income from proprietary trading and the Treasury business. The segment results reported by bank zweiplus ltd fell well short of expectations: a loss in connection with fraudulent conduct by a distribution partner in Germany resulted in an extraordinary impairment loss of CHF 8.0 million, which was a significant drain on the company's profit. Legal proceedings have been initiated for suspected fraud.
Sarasin Group´s operating profit increased to CHF 124.5 million (2009 adjusted: CHF 121.7 million). Sarasin therefore slightly exceeded its goal of equalling last year´s operating profit.
Quota of sustainably managed assets reaches 30% During the reporting period the value of assets managed sustainably by the Sarasin Group amounted to CHF 13.4 billion on 31 December 2010. The proportion of sustainably managed funds and asset management mandates (including in-house funds) as a percentage of the total client assets managed by the Sarasin Group came to 30% at the end of 2010.
Since the onset of the financial crisis in particular, Bank Sarasin´s broadly based research and the transparency of its investment process is proving increasingly popular. This is reflected in the 23% increase in the number of asset management mandates for private clients in Switzerland during the reporting period. The associated volumes increased virtually in parallel. Bank Sarasin introduced sustainability as an additional decision-making criterion for all asset management mandates for private clients in Switzerland with effect from 2009. By consistently orienting portfolio management to its expertise as market leader in sustainable asset management, Bank Sarasin is catering for customer demand for this type of investment style. The trend in our in-house sustainability funds also demonstrates that investors have a particularly high level of confidence in this investment approach: in 2010, total net inflows of CHF 386 million were recorded for the investment funds, structured products and funds-related investment products in the Sarasin Investment Foundation (SAST) under the Swiss pension system´s second and third pillar.
Capital base still solid Equity capital at the end of December 2010 remained unchanged at CHF 1.3 billion. The equity ratio improved slightly from last year to reach 9.7%. Because of the further increase on the customer side of the balance sheet, the equity ratio dropped to 7.3% on 31 December 2010 (31.12.2009: 8.4%). The BIS Tier 1 ratio, defined as core capital as a percentage of risk-weighted assets, came to 15.3% at year-end 2010 (31.12.2009: 16.3%), confirming the Bank's solid capital base.
Annual General Meeting: Board of Directors' proposals The terms of office of the directors Christian Brueckner, Hans-Rudolf Hufschmid and Peter Derendinger are due to end at the forthcoming AGM. While Christian Brueckner is not putting himself forward for re-election on grounds of age, Hans-Rudolf Hufschmid and Peter Derendinger will be proposed for re-election at the AGM. The Board of Directors also intends to submit a proposal to the AGM to keep the dividend unchanged at CHF 0.90 per class B registered share.
Exploiting potential in existing markets As a sustainable bank, Sarasin will continue to pursue long-term profitable growth which is built on quality and can be achieved without running up excessive costs. The key is to find the right balance between geographical diversification and focused attention on core markets. Bank Sarasin already has a broad geographic footprint and is present in a number of markets that promise excellent growth prospects. The focus is on selected European countries such as Germany, where Bank Sarasin is the first foreign financial institution to have already broken even in just the third year of trading, along with the very promising markets of the future in the Middle East and Asia. During the reporting period Bank Sarasin further optimised its regional presence by opening new locations in Bahrain and Abu Dhabi as well as obtaining a banking licence for its Hong Kong operations. The licence for Singapore is due to be upgraded soon. During 2011 Sarasin will be augmenting its Swiss network with a new office in Lucerne in a move to further strengthen its position in its home market. There are currently no plans to break into new national markets in the mid-term. The priority is to exploit the available potential in existing markets.
Outlook 2015: AuM of CHF 150 billion and improved profitability Bank Sarasin is cautiously optimistic about the 2011 financial year and, despite the uncertainties in the global political arena and the macroeconomic imbalances, it expects the economic recovery to continue and 2011 to be a positive year for investments. Sarasin plans to temper the speed of its growth in order to meet its AuM target of CHF 150 billion (performance-adjusted) by 2015. The top priority is to increase the operating result and improve profitability. Sarasin plans to significantly increase its gross margin and cut the cost income ratio by making further improvements in efficiency.
end of ad-hoc-announcement ========================================== ====================================== The Annual Report 2010 of Bank Sarasin & Co. Ltd is available as of today, 24 February 2011, 7.00 a.m. at www.sarasin.com
end of announcement euro adhoc --------------------------------------------------------------------------------
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