After a very strong result a year ago on the back of higher interest rates and other forces, the private banking group's overall profit declined. Organic net asset inflows rose, as did assets under management.

LGT, the Liechtenstein-headquartered private banking group, today said its operating income for the first six months of 2024 rose 4 per cent year-on-year to SFr1.28 billion ($1.48 billion). However, group profit for the first half of 2024 was SFr174.6 million, slipping 22 per cent compared with an “exceptionally strong result” for the prior-year period, LGT said in a statement. Group profit was SFr174.6 million.

Income from services in the core business rose 15 per cent to SFr852.4 million on the back of higher brokerage income and increased investment and administration fees, it said in a statement.  

After the strong positive effect of the rise in interest rates seen in 2023, LGT said net interest income fell 30 per cent to SFr192.3 million in the “normalised interest rate environment.” 

Income from trading activities and other operating income rose by 10 per cent to SFr239.1 million, reflecting interest rate and valuation effects on the bond portfolio, increased client activity and the higher asset base.

Personnel expenses rose 12 per cent to SFr767.2 million on the back of continued staff growth in the areas of client advisory as well as products, services and technology, while accruals for long-term compensation were lower than in the prior-year period. 

LGT said the 11 per cent rise in business and office expenses to SFr224.5 million is due in particular to higher IT costs for digitalisation projects.

The cost-income ratio rose to 77.3 per cent as at the end of June 2024, compared with 74.2 per cent as at the end of 2023. 

The banking group said it is well capitalised with a Common Equity Tier 1 capital ratio of 19 per cent, as at the end of June.

Inflows
LGT said organic net asset inflows totalled SFr8.0 billion in the first half of this year, equating to an annualised growth rate of 5 per cent. 

The group said a reason for a year-on-year fall in net new assets was a substantial one-off inflow from a major pension fund client of LGT Capital Partners in the first half of 2023, as previously communicated. 

Assets under management increased 13 per cent to SFr356.0 billion as at 30 June 2024, compared with SFr316.0 billion as at year-end 2023. In addition to the net asset inflows, this reflects positive market performance and foreign currency effects.

The group recently widened its Germany footprint, and now has offices in Hamburg, Frankfurt, Cologne and Düsseldorf. It has also integrated abrdn’s UK wealth management business, and developed Asia private banking business in India, Thailand and Japan.