Vontobel Holding Ag · SIX:VONN
Vontobel — FY2019 Earnings Presentation
40 slides from Vontobel's earnings presentation, Feb 12, 2020
Slide 1: Vontobel full-year 2019 results
Vontobel full-year 2019 results Zeno Staub Martin Sieg Castagnola CEO CFO February 12, 2020
Slide 2: Cautionary statement regarding forward-looking statements and disclaimer
Cautionary statement regarding forward-looking statements and disclaimer February 12, 2020 This document may contain projections or other forward-looking statements related to Vontobel that are subject to known and unknown risks, uncertainties and other important factors. These projections and forwa
Slide 3: Overview
Overview February 12, 2020 Highlights Full-year 2019 results Strategy update Questions and answers
Slide 4: Good performance in asset-linked businesses drive earnings per share and return on equity
Good performance in asset-linked businesses drive earnings per share and return on equity February 12, 2020 Key figures as of December 31, 2019 Client assets Net new money CHF 226.1 bn of which CHF 198.9 bn CHF 11.7 bn (6.9%) of assets under management Operating income Group net profit Per share dat
Slide 5: Asset Management confirmed position as strong driver of growth and Combined Wealth Management realized economies of scale
Asset Management confirmed position as strong driver of growth and Combined Wealth Management realized economies of scale February 12, 2020 Clients continue to endorse our products and services – Operating income grew by 9%, driven by contributions from Combined Wealth Management1 and Asset Manageme
Slide 6: Overview: Full-year 2019 results
Overview February 12, 2020 Highlights Full-year 2019 results Strategy update Questions and answers
Slide 7: Advised client assets reach new high at CHF 226.1 billion driven by strong performance
Advised client assets reach new high at CHF 226.1 billion driven by strong performance and strong net new money February 12, 2020 Advised client assets (CHF bn, end of period) AuM development (CHF bn) 226 11% p.a. 11 17 193 2018 1.2 65.7 104.2 171.1 187 8 9 14 13 NNM 11.7 155 148 6 6 10 6 FX - 2.3 1
Slide 8: Well-diversified asset base reflects our resilient business model
Well-diversified asset base reflects our resilient business model February 12, 2020 Advised client assets by client domicile (end-2019) Advised client assets by product (end-2019) Other Other1 Liquidity 12% 8% Switzerland Italy 6% 6% 41% Equity US 36% 8% Multi Asset 25% 10% UK 12% 12% 24% Emerging M
Slide 9: Operating income increases by 9% with solid growth in net fee and commission income
Operating income increases by 9% with solid growth in net fee and commission income February 12, 2020 Operating income (CHF mn) Comments 46.6 71.0 -18.9 5.3 1,261.9 AM Operating income rose by 9% on the 1,157.8 CWM back of an increased asset base in 511.3 FP Asset Management and Wealth 464.7 CC Ma
Slide 10: Adjusted pre-tax profit increases 5%
Adjusted pre-tax profit increases 5% February 12, 2020 Pre-tax profit (CHF mn) Comments C/I ratio C/I ratio C/I ratio C/I ratio Operating income rose by 9%, or 8% 76.5% 74.7% 75.1% 75.6% adjusted for the SIX special dividend +11% Operating expense increased by 8% or 10% on an adjusted basis +5%
Slide 11: Good performance translates into solid net profit and a new record earnings per share
Good performance translates into solid net profit and a new record earnings per share February 12, 2020 Group net profit (CHF mn) Comments Group net profit rose 14% to CHF 265.1 million, translating into 31-12-19 31-12-18 ∆ CHF 4.49 per share, a new high Operating income (CHF mn) 1,261.9 1,157.8 +
Slide 12: Strong capital ratios
Strong capital ratios February 12, 2020 Capital ratios CET1 ratio increased to a very solid 13.5%. 4% growth in risk-weighted positions was more than offset by increased capital (+14%), mainly 19.9% stemming from retained earnings 18.9% CET1 Total Capital Ratio was 19.9%, compared to AT1/T2 >16.
Slide 13: Asset Management with above-target inflows – leading to new record advised client assets
Asset Management with above-target inflows – leading to new record advised client assets … February 12, 2020 Net new money1 (CHF bn) Development of AuM2 (CHF bn) Advised client assets (CHF bn) 9.4% 4.0% 10.8% ∆ -14.3% 3.0% in %2 11.0 137.7 31.12.2018 104.2 121.3 117.6 16.1 7.9 NNM 11.0 10.6 11.0 100
Slide 14: Strong margin and solid pre-tax profit due to our high-conviction focus
… strong margin and solid pre-tax profit due to our high-conviction focus February 12, 2020 Gross margin on AuM1 (bps) Advised client asset split Pre-tax profit (CHF mn) and CIR (%) by product (%) Other2 Equity 198.3 51 Multi Asset 34% 3.5 180.3 46 45 30% 163.5 162.8 44 42 33.7 138.5 41.9 69 61 63 6
Slide 15: Combined Wealth Management with good investment performance while absorbing flow effects
Combined Wealth Management1 with good investment performance while absorbing flow effects from the integration February 12, 2020 Net new money (CHF bn) Development of AuM (CHF bn) Advised client assets (CHF bn) 4.4% 5.3% 4.7% 4.1% 0.8% ∆ in % 76.5 2.2 2.2 2.2 31.12.2018 65.7 67.2 NNM WM 0.1 0.2 1.7
Slide 16: Increased profitability due to good revenue growth and lean scalable business model
… and increased profitability due to good revenue growth and focus on a lean and scalable business model February 12, 2020 Combined Wealth Management Advised client asset split by Pre-tax profit (CHF mn) Gross margin1 on AuM (bps) investments (%) and CIR (%) 69 67 68 682 66 147.4 Other 11% 121.6 77
Slide 17: Financial Products impacted by lower demand in all markets
Financial Products impacted by lower demand in all markets February 12, 2020 Notional volume issued Market share of listed products Operating income (CHF mn) through Vontobel’s digital channels in 2019 and CIR (%) (CHF bn) 9.2 276 270 MARKETS Rank TURNOVER # TRADES 251 Switzerland1/2 #1 32.0% 40.4%
Slide 18: Acceleration in Asset Management and Combined Wealth Management – 88% of pre-tax profit
Acceleration in Asset Management and Combined Wealth Management – now jointly accounting for 88% of pre-tax profit1 February 12, 2020 Pre-tax profit of core activities (CHF mn) Combined Wealth Management2 Asset Management Financial Products +10% 198.3 180.3 +21% 147.4 121.6 -25% 63.1 47.2 FY18 FY19
Slide 19: Financial impact of discontinuation of sell-side business combined with immediate synergies
Financial impact of discontinuation of sell-side business combined with immediate synergies from our new way of working February 12, 2020 Operating income Operating expenses Impact on realigned business (CHF million) (CHF million) -12 -15 – In 2020, reduction in operating 26 26 income will be more t
Slide 20: Financial Calendar
Financial Calendar February 12, 2020 20 21 General Meeting of Shareholders March 30, 2020 Update on future financial reporting June 2020 Half-year 2020 results, including new mid-term targets July 28, 2020 Investor Day 2020 September 23, 2020 9M trading update 2020 November 4, 2020 Full-year 2020 re
Slide 21: Overview: Strategy update
Overview February 12, 2020 Highlights Full-year 2019 results Strategy update Questions and answers
Slide 22: Anticipating changing client needs and behavior
Anticipating changing client needs and behavior February 12, 2020 Challenges for The criteria used to select a financial partner – and investors the way clients interact with that partner – are changing Saving is Off-the General Global From Client Anytime Digital dead shelf public is pension product
Slide 23: One Vontobel
We think in terms of client needs and deliver best-fit solutions February 12, 2020 One Vontobel Client Units Centers of Excellence 23
Slide 24: High conviction strategy and strong investment culture pay off
High conviction strategy and strong investment culture pay off February 12, 2020 Strong long-term track record in funds: Longstanding track record based on a valid 1st and 2nd quartiles (% of AuM) investment conviction 96 95 – 5 of our funds have a track record spanning more than 94 88 27 years 86 8
Slide 25: Relative strength translates into strong net new money flows – distribution platform is a key driver
Relative strength translates into strong net new money flows – distribution platform is a key driver of this success February 12, 2020 Cumulative flows in active funds1 (CHF bn) Strong distribution platform across different focus markets Market: Flows across European Vontobel: Broad-based flows and
Slide 26: Strong track record in ESG investing and expertise across the firm
Strong track record in ESG investing and expertise across the firm February 12, 2020 Pioneer in ESG investing Third-largest ESG manager in Switzerland 30.7 AuM (CHF billion) – Own ESG research team for more than 20 years; 23.3 today, more than 40 investment experts focus on ESG investment strategies
Slide 27: Client investment needs are changing
Client investment needs are changing Vontobel has credible experience and solutions February 12, 2020 Emerging Markets – ESG – Fixed Income – growing under-invested on the way to becoming even more important with low markets mainstream or negative interest rates +26% +31% +32% 45 AuM1 (CHF billion)
Slide 28: We are committed to our 2020 targets
We are committed to our 2020 targets February 12, 2020 Growth Profitability Capital and payout Top-line growth (in %) Return on equity (in %) Total capital ratio (in %, end of period) 9.0 19.9 14.2 > 14 > 161 4-6 2019 Target 2020 2019 Target 2020 2019 Target 2020 Net new money growth (in %) Cost/inc
Slide 29: Committed to building on a strong base to transform change into opportunity
Committed to building on a strong base to transform change into opportunity February 12, 2020 Strong asset base (CHF bn) Client-centric investment Increased client focus will manager deliver growth – Anticipating growing demand for – Complement well-established asset- professional investment solutio
Slide 30: Questions and answers
Questions and answers 30
Slide 31: Appendix
Appendix 31
Slide 32: All core businesses with ambitious targets
All core businesses with ambitious targets WM with new ones since June 2018 February 12, 2020 Combined Wealth Management1 Asset Management Financial products NNM growth (in %) NNM growth (in %) Operating income 4-6 10.8 > 300 251.3 4-6 0.8 2019 Target 20201 2019 Target 2020 2019 Target 2020 Gross ma
Slide 33: Successful implementation of Vontobel's strategy has delivered attractive returns to shareholders
Successful implementation of Vontobel’s strategy has delivered attractive returns to shareholders for more than a decade February 12, 2020 Return on equity and dividends Comments – Attractive business with average 21.6% return on equity of 12.1% since 19.2% 2003 – clearly above Vontobel’s 18.0% cost
Slide 34: Vontobel delivers good net profit in a difficult market environment
Vontobel delivers good net profit in a difficult market environment for transaction-based business February 12, 2020 Group net profit (CHF mn) EPS EPS EPS EPS CHF 3.96 CHF 4.26 CHF 4.38 CHF 4.49 +14% +4% 9.7 258.9 10.2 10.3 265.1 249.2 6.1 232.2 17.0 251.01 220.71 FY18 NLR FY18 Increase of FY19 Inte
Slide 35: Our value proposition and service model drove margin stabilization and a shift in mix
Our value proposition and service model drove margin stabilization and a shift in mix towards more recurring income …. February 12, 2020 Composition of gross margin in Composition of gross margin in Combined Asset Management (in bps) Wealth Management (in bps) 68 68 66 5 4 5 11 11 9 45 42 0 1 10 11
Slide 36: Technology and data as key success factor going forward
Technology and data as key success factor going forward February 12, 2020 – Critical mass and depth to attract tech talent People – Continued investments in full stack, artificial intelligence and cloud skills – Offer work environment that bridges with tech culture – Technology area shifts to one-sp
Slide 37: Swiss market is fragmented and undergoing structural change
Swiss market is fragmented and undergoing structural change – creating opportunities for Vontobel to accelerate growth February 12, 2020 Private banks in Switzerland Comments -36% – Number of Swiss private banks has decreased by more than 30% since 158 147 2011 138 – Structural change is expected 13
Slide 38: High quality of bond portfolio maintained
High quality of bond portfolio maintained February 12, 2020 Counterparty exposure by rating (end-2019) Counterparty exposure by sector (end-2019) 7% 0% 20% 22% 27% 40% 31% 53% Government / public sector bodies AAA A Other Financials AA BBB Corporate (non-financials) Note: Total issuer risk from debt
Slide 39: Financial Products accounts for less than one-fifth of capital usage
Financial Products accounts for less than one-fifth of capital usage February 12, 2020 Capital consumption as of 2019 (CHF mn) 564.6 1,123.9 560.8 391.5 258.2 185.4 180.1 181.8 35.6 75.9 115.7 195.4 1.5 0.0 123.8 71.6 97.2 67.1 187.6 38.5 42.6 9.3 0.0 -12.5 Capital Combined Wealth Asset Management F
Slide 40: Vontobel families hold more than 50% of share capital
Vontobel families hold more than 50% of share capital and are strongly committed to Vontobel February 12, 2020 Shareholder structure1 Vontobel Foundation and Pellegrinus Holding 19.6% Free float 49.3% Pooled shares total Vontrust AG 14.3% Shares in the core pooling 50.7% agreement 44.4% Advontes AG