Financial Results

Operating Income Rises At Liechtenstein's VP Bank

Tom Burroughes Group Editor London 13 March 2024

Operating Income Rises At Liechtenstein's VP Bank

The bank's CEO said it increased earning power and normalised growth in costs, all the more impressive in what has been a difficult geopolitical and interest rate environment. Last year, bottom-line figures were affected by sanctions involving Russian clients.

VP Bank Group, the Liechtenstein-headquartered bank, yesterday said its operating income rose 8.3 per cent to SFr364.4 million ($416 million). Net income came in at SFr44.2 million in 2023, a 10.1 per cent increase.

Rising interest income and trading activity boosted income overall. Commission and service-related business held stable.

Client assets under management remained stable at SFr46.4 billion, the bank said in a statement.

Net new money inflows were "positively impacted" by initiated outflows due to adjustments to the client portfolio, including those client relationships with Russian connections. (In March last year, VP said its results were affected by one-off effects caused by processing sanctions involving Russian clients. Two years ago, Switzerland, along with the European Union, UK and US, and certain other nations, imposed sanctions on Russia for its invasion of Ukraine.)

VP said its net new money inflow at the end of 2023 was SFr27 million.

“In a challenging geopolitical and interest rate environment, VP Bank once again succeeded in increasing its earning power while at the same time normalising cost growth,” Paul H Arni, group CEO of VP Bank, said. 

Operating expenses rose by 7.7 per cent to SFr313.5 million. As previously announced, this includes write-downs on investments made and exceptional compliance costs related to adjustments to the client portfolio, the bank said.

The cost/income ratio narrowed from 86.6 per cent to 86.0 per cent.

VP Bank said its tier 1 capital ratio – a yardstick of a bank’s “shock absorber” against adverse market events – was 24.9 per cent, and the liquidity coverage ratio was 305.8 per cent.

Results were affected, VP Bank said, by the “significant appreciation of the Swiss franc.” VP Bank makes less than 30 per cent of its corporate earnings in Swiss francs, whereas almost 80 per cent of its costs are in this currency. If exchange rates had remained constant, net income for the year would have grown by around 30 per cent,” it said. 

The lender confirmed its financial targets: an annual revenue growth rate of between 4 and 6 per cent; annual net new money growth of at least 4 per cent; a tier 1 ratio of more than 20 per cent; and a cost/income ratio of less than 75 per cent by 2026.

The board of directors proposes approving an unchanged dividend pay-out of SFr5.00 per registered share A and SFr0.50 per registered share B at the annual general meeting on 26 April 2024,

Also at the annual meeting, the board proposes to elect Dr Dirk Klee as a member for a three-year term, and to re-elect Philipp Elkuch for three years. It also intends to elect Stephan Zimmermann as its new chairman at an extraordinary meeting following the annual general meeting, it added.

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