St.galler Kantonalbank Ag · SIX:SGKN

St.galler Kantonalbank — FY2013 Earnings Presentation

34 slides from St.galler Kantonalbank's earnings presentation, Feb 12, 2014

  1. Slide 1: St.Galler Kantonalbank Year End Results December 31, 2013

    St.Galler Kantonalbank Year End Results December 31, 2013 February 12, 2014

  2. Slide 2: Agenda

    Agenda  Results December 31, 2013  Strategy adjustment Private Banking  Outlook 2014 2

  3. Slide 3: Determining factors in 2013

    Determining factors in 2013  Economic environment  Transformation process asset management  Economy  Strategic adjustment  Stock exchange  Strategy tax transparency  Interest rates  Retrocession solution  Real estate market  Withholding tax (UK)  U.S. program 3

  4. Slide 4: Results influenced by transformation process

    Results influenced by transformation process  Good operating result  Operating income 2.6% below the previous year  Low interest rates burden interest income (-2.4%)  Administrative expenses substantially reduced (-4.2%)  Gross profit on the previous year's level (-0.5%)  Special factors:  St

  5. Slide 5: Gross profit on last year's level

    Gross profit on last year's level CHF million 2011_YE r 2012_YE r 2013_YE Operating income 478 4.9 % 502 -2.6 % 489 Administrative expenses -288 -3.1 % -280 -4.2 % -268 Gross profit 190 17.1 % 222 -0.5 % 221 Depreciation -30 3.7 % -31 1.5 % -32 Valuation adjustments, provisions and losses -5 - -10 -

  6. Slide 6: Special factors affect group net profit 2013

    Special factors affect group net profit 2013 160 -3.4 140 -2.2% -9.6 -6.3% 120 -36.7 +4.6% +7.0 100 -24.3% CHF million 80 151 60 109 40 20 0 Net Profit UK withholding Strategy US Tax Program Operative Net Profit 2012 tax adjustments (after taxes) Business 2013 (after taxes) (after taxes) 6

  7. Slide 7: Impact of special factors

    Impact of special factors Special 2013_YE Δ 2013_adj. CHF million 2012_YE 2013_YE factors in adjusted vs. 2012_YE 2013 Operating income 502 489 -3 492 -1.9% Administrative expenses -280 -268 -1 -267 -4.6% Gross profit 222 221 -5 226 +1.6% Depreciation -31 -32 0 -32 +1.5% Valuation adjustments, provi

  8. Slide 8: Interest income inhibits operating income

    Interest income inhibits operating income 600  Operating income: -2.6% Σ 502 Σ 478 4 Σ 489  Interest income: -2.4% 500 5 -2.6% 6 +4.9% 45  Higher volumes in the balance sheet 39 39 business 400 138 138  Yield curve situation presses on CHF million 145 300 interest margin  Increased margin in th

  9. Slide 9: Analysis of interest income

    Analysis of interest income Actual comparison (December 31, 2012  December 31, 2013) Material volume effects* Material price effects Due from Due to Loans Due to banks -600 million banks -210 million to clients -0.22% banks -0.39% Loans Client Financial Client to clients + 1‘040 million funds +310

  10. Slide 10: Administrative expenses decreased by 4.2%

    Administrative expenses decreased by 4.2% 350  Personnel expenses (-1.2%) Σ 288 Σ 280 300 Σ 268 decrease due to lower variable -3.1% -4.2% compensation and lower other 250 111 employee costs 106 96 CHF million 200  Other operating expenses (-9.0%) 63.1% significantly reduced by savings in 150 58.1

  11. Slide 11: Loans to clients: Solid growth of Net New Loans 3.4%

    Loans to clients: Solid growth of Net New Loans 3.4% Retail clients +396 Mio. +3.4% Commercial clients +323 Mio. +5.1% Others -77 Mio. -3.7% 23'400 +20.9% 23'200 -151 267 +3.2% -13.1% -136 23'000 60 22'800 CHF million 642 22'600 23'042 22'400 22'200 22'360 22'000 Dec 31, 2012 Retail and PB parent Hy

  12. Slide 12: Quality of credit: Indicators remain very positive

    Quality of credit: Indicators remain very positive 800 0.8% 700 600 0.70% 0.7% 500 0.65% CHF million 400 0.64% 673 699 300 675 503 87.6% * 494 0.6% 79.6% * 509 77.1% * 200 100 170 149 181 144 190 147 48 56 45 0 0.5% 2011_YE 2012_YE 2013_YE Impaired loans Estimated proceeds from liquidation Impaired

  13. Slide 13: Real Estate Market Eastern Switzerland: Solid development

    Real Estate Market Eastern Switzerland: Solid development Transaction prices single-family house Transactions prices owner-occupied flats 260 340 320 240 Index 1. Quartal 2000 = 100 300 Index 1. Quartal 2000 = 100 220 280 260 200 240 180 220 160 200 180 140 160 120 140 120 100 100 80 80 2000 2001 20

  14. Slide 14: Managed assets: Expected outflows

    Managed assets: Expected outflows Retail clients +426 million +4.3% CEE -362 million -23.2% Commercial clients -324 million -8.8% Latam -81 million -6.3% Other +62 million +20.7% Other -117 million -1.8% 39'000 +1.2% +164 -284 38'000 -1.8% -560 -6.0% 37'000 CHF million -2'272 36'000 38'158 +860 35'0

  15. Slide 15: Origin of Net New Money by region

    Origin of Net New Money by region  Net New Money Total CHF -596 Mio. 413  Market Switzerland influenced by negative NNM in the Institutional -354 business -76  Market Germany and the -413 business with individuals in the Market Switzerland have a -40 -125 positive net new money  The outflows in

  16. Slide 16: Fee and commission income: AuM margin increased

    Fee and commission income: AuM margin increased Asset allocation of managed assets Total 36.1 billion bonds  Asset Allocation: 22% 13%  Continued high liquidity holdings shares 17%  AuM-margin: 2% structured products  Increased by 3bp to 71bp 2% funds  Friendly stock markets in the first half 3

  17. Slide 17: Quality of balance sheet: Strong equity base

    Quality of balance sheet: Strong equity base 2'500 16.0% 16.1% 14.4% 14.7% 13.9% 14.0% 12.3% 12.6% 59 2'000 435 384 481 (155%) 338 capital 117 surplus (161%) 1'500 555 572 1'081 541 million 537 (150%) (150%) (150%) (150%) CHF million 2'100 2'162 2'162 1'000 2'002 1'110 1'144 1'081 1'073 500 0 2011 2

  18. Slide 18: Agenda

    Agenda  Results December 31, 2013  Strategy adjustment Private Banking  Outlook 2014 18

  19. Slide 19: Focusing, simplifying and reducing risk

    Focusing, simplifying and reducing risk  Private Banking  Focus on the domestic market Eastern Switzerland and the additional growth markets of Germany and German-speaking Switzerland  Corporate Center and Service Center  Bundling of tasks in St. Gallen and elimination of duplicate functions  G

  20. Slide 20: Organisation of SGKB Group

    Organisation of SGKB Group Board of Directors Internal Audit Parent company Subsidiary * Management Board Chairman SGKB = Chairman of Board of subsidiary SGKB Deutschland AG Retail and Private Service Corporate Commercial Banking Center Center Clients * As the legal successor of Hyposwiss Privatbank

  21. Slide 21: Focus on a few business segments and markets

    Focus on a few business segments and markets Domestic market Complementary growth Eastern German-speaking Nachhaltige Germany Switzerland Wertsteigerung Switzerland - Wealthy private clients 1. Growth: Banking Private primarily organic - EAM 2. Productivity: - Institutional operational investors exc

  22. Slide 22: SGKB Private Banking Zurich

    SGKB Private Banking Zurich  Closeness: Anchored in the Greater Zurich area  Security: Solid ownership and state guarantee  Tradition: Private Banking experience over decades with an established client base  Professionalism: Proven investment expertise thanks to own investment center Quality and

  23. Slide 23: Value creation by strengthening core competencies

    Value creation by strengthening core competencies Overall objective Sustainable value increase Value drivers Produc- Growth Risk tivity Core competencies Operational Customer Investment Risk Excellence advice management management and service  Simplification of  Clear client focus  Concentration

  24. Slide 24: Transformation of asset management: additional building blocks

    Transformation of asset management: additional building blocks  Strategy of tax transparency for foreign customers  EU customers until the end of 2014  Rest of the world until the end of 2015  Retrocessions  Past: Refund  Future: Transparency, new product offer (PAC service packages: Compact,

  25. Slide 25: Implementation of tax transparency: Conceptual overview

    Implementation of tax transparency: Conceptual overview Opening of Portfolio Monitoring Tax risk classes accounts review of existing Class A clients unproblematic Tax regime Classification of individuals Indications Class B Client behavior Increased Product usage due dilligence Transactions Class C

  26. Slide 26: Agenda

    Agenda  Results December 31, 2013  Strategy adjustment Private Banking  Outlook 2014 26

  27. Slide 27: Mid-term financial targets

    Mid-term financial targets Net New Loans in % of total loans to clients 3% Net New Money in % of managed assets* 4% Cost/Income ratio 50% Return on Equity (RoE) before taxes 10% * Managed assets = AuM, client funds and fund assets minus double counting 27

  28. Slide 28: Impact of restructuring on financial year 2014

    Impact of restructuring on financial year 2014  Results as of December 31, 2013  Hyposwiss Geneva yet fully included in the consolidated financial statements; sale with retroactive effect to January 1, 2014; elimination of business volume of around CHF 1.6 billion  Assets and employees of the CEE

  29. Slide 29: Key topics 2014

    Key topics 2014  Implementation of growth initiatives:  Market German-speaking Switzerland Private Banking  Market German-speaking Switzerland Corporate clients  SGKB Germany  Increase in earnings quality in the lending and investment business  Implementation of the strategy of tax transparenc

  30. Slide 30: Outlook 2014

    Outlook 2014  Due to the special factors which impacted the consolidated group net profit in 2013, the Bank expects for the 2014 financial year a net profit about in the range of the fiscal year of 2012.  In this forecast, the deconsolidation of the units sold is taken into account. 30

  31. Slide 31: Shareholder-friendly dividend policy

    Shareholder-friendly dividend policy 4.0 77% 73% 69% 3.5 65% 66% 64% 62% 3.0 55% 2.85 2.78 2.5 2.62 43% 43% 2.58 40% in Mia. CHF 40% 2.0 2.17 2.14 2.10 1.97 1.94 1.5 1.45 1.0 1.17 1.03 0.5 5.9% 5.2% 5.2% 4.3% 4.2% 4.3% 3.9% 3.9% 3.2% 3.3% 3.8% 4.0% 0.0 2002 2003 2004 2005 2006* 2007 2008 2009 2010 2

  32. Slide 32: SGKB as a worthwhile investment for the Canton of St.Gallen

    SGKB as a worthwhile investment for the Canton of St.Gallen Profitability of the cantonal banks for the cantons based on book value, dividend and capital transactions 10 years (IRR 2002-2012) 5 years (IRR 2007 -2012) IFZ Retail Banking-Study 2013 32

  33. Slide 33: 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

  34. Slide 34: Contact

    Contact St.Galler Kantonalbank St. Leonhardstrasse 25 9001 St. Gallen www.sgkb.ch Investor Relations: Dr. Cornelia Gut-Villa cornelia.gut@sgkb.ch Tel. +41 (0)71 231 36 92 34

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