Vontobel remained on track in the third quarter of 2019. In particular, its financial result once again reflected the high profitability of Combined Wealth Management and Asset Management, as well as strong inflows in Asset Management. Overall, Vontobel generated a respectable result in the first nine months of 2019 that exceeded the figure for the same period of 2018.
The result was in line with our expectations in view of the increasingly uncertain market conditions. The environment for both clients and Vontobel was shaped in particular by political uncertainty, weakening economic trends and a protracted phase of low interest rates.
In the first nine months of 2019, Vontobel generated a satisfactory cost/income ratio in markets that continue to be characterised by low transaction volumes; the cost/income ratio remained above the 2020 target, which it had already surpassed in mid-2019. At the same time, Vontobel reported higher profit compared to the prior-year period and generated a return on equity that was above the 2020 target.
Asset Management continued on its growth path in the third quarter of 2019 and was once again Vontobel‘s most profitable division in a market environment that remains highly competitive. At 14% (annualised), growth in net new money significantly exceeded the ambitious 4-6% target range. Growth was driven primarily by the Fixed Income Boutique, including TwentyFour Asset Management, as well as Multi Asset and Sustainable & Thematic Investing. Advised client assets rose to CHF 131.9bn in the first nine months of 2019, compared to CHF 117.5bn at the end of 2018.
With its plans to launch a new presence in Japan, it aims to further expand its distribution network. Vontobel will also make future investments in its distribution channels in the US - the world's largest market for asset management solutions.
The good profitability achieved by Combined Wealth Management in the first half of the year was reaffirmed in the third quarter, reflecting its systematic client focus, competency-based product offering and finally also the economies of scale generated as a result of its broader-based business.
Vontobel will fully complete the integration of the former Notenstein La Roche Privatbank by the end of 2019. Following the closing of the transaction, Vontobel will not only acquire new clients but will also deepen its business activities with existing clients. In doing so, it will continue to place a particular emphasis on the quality of earnings without losing sight of its growth targets.
Advised client assets in Combined Wealth Management reached CHF 73.6 bn at the end of the third quarter of 2019 (end-2018: CHF 67.2b). The good performance of the markets and our products were the main drivers of this result. In line with the industry, the growth in new money was below our 4-6% target range and did not accelerate last quarter. As a result, Combined Wealth Management recorded CHF -0.2bn of net new money in the third quarter of 2019.