Vontobel generated a respectable result for the first half of 2019 despite the continued challenging operating environment.
The result primarily reflects the high level of profitability in Combined Wealth Management as well as strong growth in Asset Management. The ongoing achievement of organic growth and Vontobel's strong ability to attract new employees show that it is on the right track. The investments that it made in the past are paying off. With its high-quality offering and innovations such as the new digital active wealth management solution ‘Volt', as well as the international expansion of the business, Vontobel created new opportunities for growth in the first half of 2019.
Vontobel's net profit of CHF 131.1m for the first half of 2019 was virtually at the same level (-1%) as the result for the exceptionally strong first half of 2018 (CHF 132.7m). Adjusted for integration costs as well as a special dividend on Vontobel's participation in SIX Group AG, net profit totaled CHF 131.9m. The result reflects the solid development of margins as well as a good profit contribution from Asset Management and Wealth Management, which accounted for around 85% of the pre-tax profit generated by the divisions. In an environment characterized by continued low transaction volumes, Vontobel once again achieved good profitability in the first half of 2019, with a cost/income ratio of 75.8%. The return on equity was 14.3% (15.1%). Vontobel has set itself the target of generating a cost/income ratio of less than 72% and a return on equity of more than 14% by 2020. Vontobel saw pleasing growth in advised client assets, which rose to CHF 212.9bn (end-2018: CHF 192.6bn). The net inflow of new money at Group level - which was substantially driven by asset management strategies - totalled CHF 5.3bn, compared to CHF 5.1bn in the first half of 2018. The good performance of investment solutions offered by Asset Management and Wealth Management, most of which outperformed their respective benchmarks, also had a positive impact.
"The result for the first six months of the year shows that Vontobel remains on course and is moving ahead with the targeted implementation of its strategic priorities. Our organic growth underscores our clients' satisfaction with our service and offerings. We are committed to our ambitious 2020 targets, although we expect the environment to remain challenging in the second half of the year. There are no signs of a change in operating conditions. The coming months will also be characterised by low interest rates, geopolitical uncertainty, a slowing economy and global pressure on margins. Despite these challenges, we will continue to invest in our strategic projects and pursue our differentiated and well-considered cost management efforts. Our focus is on capturing opportunities for growth and we are following an approach based on quality, specialization and innovation," stated Zeno Staub, CEO of Vontobel.
With seven new locations in Switzerland and around 100 new relationship managers who are now part of Vontobel following the acquisition of Notenstein La Roche Privatbank, Vontobel has decisively strengthened its basis for future growth in its Swiss home market. The integration is at an advanced stage and will be fully completed in 2019. In spring 2019, Vontobel successfully completed the acquisition of the US-based private clients portfolio from Lombard Odier.
Following the completion of the transactions, Vontobel is now focusing on harnessing the new opportunities they bring and on deepening the business with existing clients as well as acquiring new clients. The quality of its products and advice should enable it to gain further market share and to realize its 2020 target of 4-6% growth.