LGT achieved a group profit of CHF155.6m and further expanded its client business in the first half of 2019.
The results reflect solid revenue growth despite a subdued start to the year, as well as further investments in LGT's market presence. Net asset inflows were once again strong at CHF 5.8bn, corresponding to an annualized growth rate of 6%. Compared with the end of 2018, assets under management rose 8% to CHF 215.0bn. LGT is confident that it will continue to achieve profitable growth in the second half of 2019.
Following a subdued start to 2019 characterised by market uncertainties and low client activity, LGT reported solid, broad-based revenue growth, particularly in the second quarter.
In the first half of 2019, the private banking and asset management group further invested in the expansion of its international presence and its client business. The local office opened in Bangkok in March and the agreement to acquire a majority stake in the Indian wealth manager Validus Wealth announced in June underscore LGT's successful growth trajectory.
LGT's total operating income increased 2% to CHF 848.2m in the first half of 2019. Income from services decreased 1% and totaled CHF 536.1m. This reflects the lower client activity at the beginning of the year, the smaller average asset base compared to the first half of 2018, as well as an accounting change, according to which certain transactions are now recognized under trading activities instead of services. Net interest income and credit losses remained stable at CHF 138.7m. Due to the above-mentioned accounting change, income from trading activities and other operating income rose 16% to CHF 173.4m.
Total operating expenses increased 4% to CHF 616.1m in the first half of 2019. Personnel expenses rose 8% to CHF 482.2m, mainly due to the increased headcount (+4%) resulting from ongoing investments in the client business. In contrast, business and office expenses fell 10% to CHF 133.9m, as certain lease payments are now recognized under depreciation due to a change in the accounting standards (IFRS 16). The increase in depreciation, amortization and provisions reflects this accordingly.
The cost-income ratio was 74.0% as at the end of 2018, compared with 72.6% as at the end of June 2019. Overall, group profit totaled CHF 155.6 million for the first six months of 2019, compared with CHF 174.8m (-11%) in the prior year period.
LGT is very well capitalised with the tier 1 capital ratio at 20.3% as at 30 June 2019, and has a high level of liquidity.
LGT once again reported strong net asset inflows in the first half of 2019 of CHF 5.8bn, which corresponds to an annualized growth rate of 6%. All regions and both of LGT's business areas contributed to this result with positive net asset inflows.
As at 30 June 2019, assets under management totaled CHF 215.0bn, representing a 8% increase compared with the end of the previous year. In addition to the net asset inflows, this rise is also attributable to positive market performance.