LGT Group posts group profit of CHF 106 million for 2009

In 2009, LGT Group’s earnings reflected a year-on-year decline in client assets coupled with a clear shift into lower-margin interest-bearing products. As a result, net interest income increased 36%, while income from services declined 25%. Income from trading activities and other operating income climbed 118%, mainly as a result of gains on the group’s own securities. LGT Group’s total operating income declined only 1% overall to CHF 779 million in 2009.

Total operating expenses increased 8% to CHF 578 million in 2009. Business and operating expenses fell 4%, while personnel expenses grew 14% despite a 16% reduction in bonus payments. This increase was due in part to the full-year effect of new staff hired during the 2008 financial year. Added to this, the second half of 2009 saw the negative impact of long-term salary components totaling CHF 12.7 million whose future payment will be subject to the development of the company’s equity capital (the previous year, these components had reduced total operating expenses by CHF 36.0 million). Also in the second half of 2009, provisions were made in connection with the integration of Dresdner Bank (Switzerland) and general cost-reduction initiatives.

The development of costs last financial year was shaped by a combination of ongoing investment in the international business on the one hand, and targeted cost-cutting measures on the other. The latter will result in savings of around CHF 46 million per year. LGT Group’s deliberately countercyclical investment approach is reflected in an increase in the cost/income ratio, up from 68% to 74% in 2009.

LGT Group posted a group profit of CHF 106 million for the 2009 financial year, down 35% from CHF 163 million in 2008. Group equity capital increased 16% to CHF 2.9 billion. With a Tier 1 capital ratio of 18.5% on 31 December 2009 (16.5% at end-2008), the company has a very good liquidity profile and above-average capitalization.

Net new money develops positively in onshore markets and asset management Client assets under administration grew 14%, up to CHF 89.0 billion at 31 December 2009 from CHF 78.0 billion at the end of 2008. This development reflects the addition of CHF 8.2 billion in assets acquired with Dresdner Bank (Switzerland) on 1 December 2009, and growth of CHF 6.5 billion due to positive market developments. The sale of the trust and fiduciary business, tax amnesties, the implementation of the new US policy, and the tax debate all impacted the development of net new money, leading as anticipated to outflows of assets from Liechtenstein. Net asset inflows were recorded at all of LGT’s international locations and in asset management. The overall result was a net outflow of CHF 3.7 billion.

Positive outlook for 2010 LGT Group is convinced that investors will continue to demand cross-border banking services in the future, and this business will therefore remain an integral component of its wealth management operations. To date Liechtenstein has signed twelve Tax Information Exchange Agreements and three tax treaties with other nations. In addition to this, the Liechtenstein Disclosure Facility initiated with the UK has set new standards in terms of creating a legal framework in the interests of everyone involved. LGT fully supports Liechtenstein’s approach and strategy in this matter.

HSH Prince Max von und zu Liechtenstein, CEO of LGT Group: “LGT Group has proven how proactive, robust and financially strong it is. Our priorities for 2010 are clear: we will continue to invest in building international business in our onshore and growth markets and asset management, while at the same time making careful use of our resources and keeping a firm grip on costs. We are, however, prepared to accept temporary investment-related reductions in earnings. Regarding net asset inflows we expect a positive development in 2010. Our start this year has so far been promising. With our international growth strategy we have anticipated the structural changes in cross-border banking at an early stage. As a family business with a long-term horizon and a strong capital base, we will be able to benefit from the consolidation of the market. We are convinced that this approach will best serve the interests of our clients and staff, and enable us to position ourselves as an attractive partner for the future.”

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