St.Galler Kantonalbank AG · SIX:SGKN
St.Galler Kantonalbank — FY2015 Earnings Presentation
30 slides from St.Galler Kantonalbank's earnings presentation, Feb 17, 2016
Slide 1: St.Galler Kantonalbank Year End Results December 31, 2015
St.Galler Kantonalbank Year End Results December 31, 2015 February 17, 2016
Slide 2: Agenda
Agenda § Key factors financial year 2015 § Results per December 31, 2015 § Strategic transformation § Subsidiary SGKB Deutschland (Germany) § Initiatives for the future § Outlook 2016 2
Slide 3: Key factors in 2015
Key factors in 2015 § Shaping influence of strong Swiss franc and negative interest rates § Strategic transformation completed § Vadian Bank successfully integrated § Good development of subsidiary SGKB Deutschland (Germany) § DOJ Swiss Bank Program completed for all company units Group net profit 8
Slide 4: Agenda
Agenda § Key factors financial year 2015 § Results per December 31, 2015 § Strategic transformation § Subsidiary SGKB Deutschland (Germany) § Initiatives for the future § Outlook 2016 4
Slide 5: Market environment 2015: Affected by SNB decision
Market environment 2015: Affected by SNB decision Market performance 2015 Interest rates 2015 Exchange rates 2015 indexed 31.12.2014 125 0.20% 1.25 1.25 120 1.20 1.20 0.00% 1.15 1.15 115 -0.20% 1.10 1.10 110 -0.40% 1.05 1.05 105 -0.60% 1.00 1.00 100 0.95 0.95 -0.80% 95 0.90 0.90 90 -1.00% 0.85 0.85
Slide 6: Operating income on last year's level despite difficult market environment
Operating income on last year's level despite difficult market environment 2014 2015 Delta in % (CHF million) Operating income 453 451 -0.4 Operating expenses -255 -258 +1.3 Gross profit 198 193 -2.6 Depreciation on fixed assets and goodwill -13 -16 Other Valuation adjustments, provisions & losses -
Slide 7: Operating income: compensating effect of trading activities
Operating income: compensating effect of trading activities § Influence of SNB decision § Pressure on interest margin (no negative CHF million interest rates on traditional savings and -0.4% private accounts) 5 -3 -9 +13.7% +94.7% 11 § Significantly higher interest expenses for 33 -0.9% -7.3% +4 +5
Slide 8: Analysis of interest operations
Analysis of interest operations Material volume effects Material price effects Due from banks -290 million Due to banks +70 million Due from banks +1.30% Due to banks +0.26% Loans to clients +860 million Client funds +850 million Loans to clients -0.11% Client funds +0.13% Financial Bond issues* +1'
Slide 9: Interest hedging costs
Interest hedging costs Ø Volume Swaps hedging Ø Carry Income (expenses) Payer CHF 10.4 billion -0.86 % CHF -90.3 million Receiver CHF 3.6 billion 2.27 % CHF 80.7 million Unwindings / swaption premiums / other CHF -5.1 million Result from interest hedging 2015 (parent company) CHF -14.7 million Resul
Slide 10: Operating expenses: contribution to pension fund
Operating expenses: contribution to pension fund § high cost awareness CHF million +1.3% +2.3% -0 § general and administrative +4 -0.3% expenses § on previous year's level – despite 97 97 expenditures for integration of Vadian Bank and Swiss Bank Program of DOJ § personnel expenses § contribution to
Slide 11: Loans to clients: moderate growth
Loans to clients: moderate growth CHF million +1.5% +2.6% -211 +0.1% +23 +545 -9.1% 24'243 23'886 Dec 31, 2014 Retail and Private Market Dec 31, 2015 Loans to clients Commercial Banking performance Loans to clients Banking Group inc. Interests and dividends Net New Loans (NNL) Group CHF +335 million
Slide 12: Quality of loans: Indicators unchanged very positive
Quality of loans: Indicators unchanged very positive CHF million 614 487 583 474 87.4% 92.5% 127 111 109 101 38 37 2014 2015 Impaired loans Estimated proceeds from liquidation Impaired loans, net Individual provisions Non performing loans 12
Slide 13: Managed assets: strong retail business
Managed assets: strong retail business CHF million -1.8% +5.1% +734 -638 -2.9% -765 36'844 36'176 Dec 31, 2014 Retail and Private Market Dec 31, 2015 Managed Assets Commercial Banking performance Managed Assets Banking Group incl. interests and dividends (incl. consolid.) Net New Money Group CHF 96
Slide 14: Commission business: restrained investors, lower margins
Commission business: restrained investors, lower margins Asset allocation of managed assets Total CHF 36.2 billion § high liquidity held by investors 10.7% 17.3% 1.9% 12.9% 33.4% 0.7% 23.2%* § small transaction volumes § asset outflow caused by adjustment bonds shares of strategy structured products
Slide 15: Quality of balance sheet: solid equity base
Quality of balance sheet: solid equity base CHF million capital § Tier1-Ratio 13.9% 348 surplus (13.8% 31.12.2014) 136 569 (150%) (162%) § Tier2-Ratio 15.4% (15.6% 31.12.2014) 2'191 1'138 2015 surplus over minimal FINMA-requirement / anti-cyclical buffer plus 2.00% anti-cyclical buffer on residentia
Slide 16: Special factors
Special factors § proceeds from sale of Swisscanto shares + 18.1 million § contribution to pension fund - 5.0 million § tax compliance, integration of Vadian Bank, - 10.7 million sale of former Hyposwiss subsidiaries § DOJ Swiss Bank Program - 35.9 million 16
Slide 17: Agenda
Agenda § Key factors financial year 2015 § Results per December 31, 2015 § Strategic transformation § Subsidiary SGKB Deutschland (Germany) § Initiatives for the future § Outlook 2016 17
Slide 18: Strategic adjustment 2013
Strategic adjustment 2013 Regulation Market Tax Digitization access compliance Complexity Risks Growth Income Costs Business Growth Tax Cost Digitization model markets compliance efficiency 18
Slide 19: Hyposwiss: Profound process of transformation
Profound process of transformation M&A process Phase 1 Hyposwiss America Geneva Eastern Europe Sale of Latin Hyposwiss - 4.1 billion units Phase 2 Integration Zurich into Branch Zürich parent company - 2.3 billion Phase 3 Tax European Union Rest of World compliance - 0.5 billion Phase 4 Mgt. Streaml
Slide 20: Completion of strategic transformation
Completion of strategic transformation § Focus on three core markets: § Domestic market Eastern Switzerland § German speaking Switzerland § Germany § Complexity reduced, structures tightened, cost efficiency increased § Operational risks reduced § Level of operating profit 2012 maintained (excluding
Slide 21: Agenda
Agenda § Key factors financial year 2015 § Results per December 31, 2015 § Strategic transformation § Subsidiary SGKB Deutschland (Germany) § Initiatives for the future § Outlook 2016 21
Slide 22: SGKB Deutschland AG: strategic position within SGKB group
SGKB Deutschland AG: strategic position within SGKB group § Strategic importance § Regulatory law § Balanced business model § Germany = most important foreign market for SGKB group § Two objectives: – Protection and development of offshore-business (booking base Switzerland) – Growth onshore-busines
Slide 23: SGKB Deutschland: Good development
SGKB Deutschland: Good development Net new money 2013 - 2015 Mandate types Managed assets in EUR million Σ 214.0 Clients with discretionary 1.0% mandates Σ 172.4 10.0% Σ 168.9 66.0 Clients with non- Net New Money discretionary mandates 33.3 Business 26.0% Multibooking 59.3 (transaction fee) Case 63.
Slide 24: Agenda
Agenda § Key factors financial year 2015 § Results per December 31, 2015 § Strategic transformation § Subsidiary SGKB Deutschland (Germany) § Initiatives for the future § Outlook 2016 24
Slide 25: Initiatives for the future on client focus
Initiatives for the future on client focus § Retail and Commercial Banking § Expand home market position with retail, commercial and corporate clients § Launch of development initiatives § Expand human resources § Private Banking § Sharpen market performance and USP in asset management business § Po
Slide 26: Mid-term financial targets SGKB group
Mid-term financial targets SGKB group previous new Net New Loans in % of total loans to clients 3% 3% Net New Money in % of managed assets* 4% 3% Cost/Income ratio 50% 55% Return On Equity (ROE) before taxes 10% 10% * Managed assets = AuM, client funds and fund assets minus double counting 26
Slide 27: Agenda
Agenda § Key factors financial year 2015 § Results per December 31, 2015 § Strategic transformation § Subsidiary SGKB Deutschland (Germany) § Initiatives for the future § Outlook 2016 27
Slide 28: Outlook 2016
Outlook 2016 § Economic outlook § No recession in Switzerland, but no economic revival either (0.8% moderate GDP growth, 0% inflation, stable EUR/CHF exchange rate, no interest rate hike expected before 2017) § U.S. rate hike cycle to be continued § Economic recovery in Euro zone, continuing ultra-e
Slide 29: Disclaimer
Disclaimer Caution regarding forward-looking statements – This communication contains statements that constitute «forward-looking statements», including, but not limited to, statements relating to the implementation of strategic initiatives, such as the expansion in private banking, and other statem
Slide 30: Contact
Contact St.Galler Kantonalbank St. Leonhardstrasse 25 9001 St. Gallen www.sgkb.ch Investor Relations: Adrian Kunz adrian.kunz@sgkb.ch Tel. +41 (0)71 231 32 04 30
St.Galler Kantonalbank — FY2015 Earnings Presentation on 6ix