Vontobel Holding Ag · SIX:VONN
Vontobel — H1 2019 Earnings Presentation
48 slides from Vontobel's earnings presentation, Jul 25, 2019
Slide 1: Vontobel half-year 2019 results
Vontobel half-year 2019 results Zeno Staub Martin Sieg Castagnola CEO CFO July 25, 2019
Slide 2: Cautionary statement regarding forward-looking statements and disclaimer
Cautionary statement regarding forward-looking statements and disclaimer July 25, 2019 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 forward-l
Slide 3: Overview
Overview July 25, 2019 Highlights Half-year 2019 results Strategy update Outlook Questions and answers
Slide 4: Solid performance: Specialist approach produces strong results
Solid performance: Specialist approach produces strong results – Vontobel largely absorbs impact of low turnover environment July 25, 2019 Key figures1 as of June 30, 2019 Client assets Net new money CHF 272.2 bn including CHF 212.9 bn CHF 5.3 bn 6.2% of advised client assets Operating income Group
Slide 5: Highly resilient business model with strong asset-related earnings and growth
Highly resilient business model with strong asset-related earnings and growth July 25, 2019 Clients continue to endorse our products and services – Operating income grew by 7%, driven by contributions from Combined Wealth Management1 and Asset Management – NNM of CHF 5.3 billion (6.2%2) and strong i
Slide 6: Half-year 2019 results
Overview July 25, 2019 Highlights Half-year 2019 results Strategy update Outlook Questions and answers
Slide 7: Advised client assets reach new high at CHF 212.9 billion
Advised client assets reach new high at CHF 212.9 billion driven by market performance and net new money July 25, 2019 Advised client assets (CHF bn, end of period) Advised client assets by client domicile (mid-2019) 213 Others 15% p.a. 10 191 193 Italy 8% 187 17 9 8 9 5% 13 14 165 13 Switzerland 15
Slide 8: Vontobel grows operating income by 7%, Group net profit down 1%
Vontobel grows operating income by 7% Group net profit down 1% July 25, 2019 Development of key figures Comments Operating income rose 7% on the back of 30-06-19 30-06-18 ∆ an increased asset base. 66% of Operating income (CHF mn) 625.6 583.3 +7% operating income stems from recurring Operating exp
Slide 9: Vontobel delivers solid net profit in a difficult market environment
Vontobel delivers solid net profit in a difficult market environment for transaction-based business July 25, 2019 Group net profit (CHF mn) Comments C/I Ratio C/I Ratio C/I Ratio 72.0% 75.4% 75.8% – Adjusted Group net profit was down 1% compared to H1 2018, same as -1% on a reported basis. 132.7 -0.
Slide 10: Combined Wealth Management with good investment performance
Combined Wealth Management1 with good investment performance while absorbing flow effects from the integration July 25, 2019 Net new money2 (CHF bn) Development of AuM (CHF bn) Advised Client Assets 6.8% 2.6% 6.4% 2.9% 0.9% ∆ +10% in % 73.6 31.12.2018 65.7 1.7 67.2 1.6 NNM WM 0.3 0.5 55.8 56.4 49.9
Slide 11: Increased profitability due to good revenue growth and lean business model
… and increased profitability due to good revenue growth and focus on a lean and scalable business model July 25, 2019 Gross margin1 on AuM (bps) Advised client asset split (%) Profit before tax (CHF mn) and CIR (%) 66 68 69 682 66 Other 71.4 13% 65.4 76 73 56.2 73 69 70 Liquidity 20% 47% Equity 45.
Slide 12: Asset Management with above-target inflows
Asset Management with above-target inflows – leading to new record advised client assets … July 25, 2019 Net new money1 (CHF bn) Development of AuM2 (CHF bn) Advised client assets -3.8% 7.2% 9.6% ∆ +9% 12.0% -1.3% in %2 5.3 128.3 4.9 31.12.2018 104.2 121.3 124.2 117.5 11.9 16.0 106.8 11.0 3.8 13.3 N
Slide 13: Strong margin and solid pre-tax profit due to balanced book of business
… strong margin and solid pre-tax profit due to our balanced book of business July 25, 2019 Gross margin on AuM1 (bps) Advised client asset split (%) Pre-tax profit (CHF mn) and CIR (%) Other2 93.4 92.5 Equity 87.8 45 44 Multi Asset 86.0 43 42 42 3.6 34% 31% 32.2 69.5 66 60 60 62 64 40.0 11.6 18.6 2
Slide 14: Financial Products impacted by lower demand in all markets
Financial Products impacted by lower demand in all markets July 25, 2019 Turnover1 of listed and non-listed Market share of listed products Notional volume issued Vontobel products in Europe in H1 2019 through Vontobel’s digital channels and Asia (CHF bn) (CHF bn) MARKETS # Rank TURNOVER # TRADES 4.
Slide 15: Financial Products results reflect sluggish market activity and ongoing investments
Financial Products results reflect sluggish market activity and ongoing investments July 25, 2019 Operating income1 (CHF mn) Investments Pre-tax profit1 (CHF mn) and CIR (%) 159 51.5 51.9 143 133 132 112 37.6 Technology 28.5 90 64 72 78 67 New markets 11.2 1H17 2H17 1H18 2H18 1H19 1H17 2H17 1H18 2H1
Slide 16: Acceleration in Asset Management and Combined Wealth Management
Acceleration in Asset Management and Combined Wealth Management – now jointly accounting for 85% of pre-tax profit1 July 25, 2019 Pre-tax profit of core activities (IFRS, CHF mn) Combined Wealth Management2 Asset Management Financial Products -7% 92.5 86.0 +27% 71.4 56.2 -45% 51.9 28.5 1H18 1H19 1H1
Slide 17: Higher capital ratios – capital structure improved by issuing additional Tier 1 bond
Higher capital ratios – capital structure improved by issuing additional Tier 1 bond July 25, 2019 Capital ratios CET1 ratio remained at 12.3%, unchanged 18.9% 18.2% from end-2018. >16.0% The adoption of IFRS 16 on leases 6.6% 5.9% increased our balance sheet as all our office 4.0% leases now ha
Slide 18: Strategy update
Overview July 25, 2019 Highlights Half-year 2019 results Strategy update Outlook Questions and answers
Slide 19: Strategy 2020: Progress on strategic priorities
Strategy 2020: Progress on strategic priorities July 25, 2019 Deliver the unique Vontobel experience Empower people Create brand excitement among our clients Boost growth and market share Drive efficiency 19
Slide 20: Value proposition and service model drove margin stabilization
Our value proposition and service model drove margin stabilization and a shift in mix towards more recurring income …. July 25, 2019 – Vontobel brand relaunched Composition of gross margin in Combined Value proposition Wealth Management (in bps) – Build-out of investment capabilities 68 68 – Holisti
Slide 21: We continue to focus on our growth drivers
… and we continue to focus on our growth drivers July 25, 2019 Growth 1. Use strong momentum Drivers – Strong level of presence and brand power in Switzerland – Strong employer brand enables attraction of best talents – Drive growth across focus markets 2. Expand current product shelf / markets – Br
Slide 22: High conviction boutique strategy and strong investment culture pay off in Asset Management
High conviction boutique strategy and strong investment culture pay off in Asset Management July 25, 2019 Strong long-term track record: Long standing track record based on a valid 1st and 2nd quartiles (% of AuM) investment conviction – 56% of our funds have received a 4 or 5 star Morningstar ratin
Slide 23: Relative strength translates into strong net new money flows
Relative strength translates into strong net new money flows – distribution platform is a key driver of this success July 25, 2019 Cumulative flows in active funds1 (CHF bn) Strong distribution platform across different focus markets Market: Outflows across European Vontobel: Broad-based flows and c
Slide 24: Financial Products: Continue on our current path and leverage scalable platforms
Financial Products: Continue on our current path and further leverage scalable platforms July 25, 2019 Markets Markets Platforms Platforms Relative Market potential Deritrade – Deritrade turnover is increasing strongly CH Europe Asia while market volumes on the exchanges are decreasing Actively mana
Slide 25: We are committed to our 2020 targets
We are committed to our 2020 targets July 25, 2019 Growth Profitability Capital and payout Top-line growth (in %) Return on equity (in %) Total capital ratio (in %, end of period) 7.3 18.2 4-6 14.3 > 14 > 161 1H19 Target 2020 1H19 Target 2020 1H19 Target 2020 Net new money growth (in %) Cost/income
Slide 26: Outlook
Overview July 25, 2019 Highlights Half-year 2019 results Strategy update Outlook Questions and answers
Slide 27: Low / negative interest rates are here to stay
Low / negative interest rates are here to stay – could they drive structural growth in some areas? July 25, 2019 … balance sheet interest rate … active wealth and asset … alternative financing business managers platforms Income from interest We have products: We have platforms: is only 7% +150% p.a.
Slide 28: Outlook
Outlook July 25, 2019 A growing industry in a Strong asset base Vontobel to focus on organic challenging environment growth – Expansion of asset pools driven by – Complete integration process and generation of new wealth and long- +11% move forward with broader and term asset appreciation stronger s
Slide 29: Questions and answers
Overview July 25, 2019 Highlights Half-year 2019 results Strategy update Outlook Questions and answers
Slide 30: Appendix
Appendix 30
Slide 31: Advised client assets have more than tripled since 2008
Advised client assets have more than trippled since 2008 – demonstrating Vontobel’s successful focus on its core capabilities July 25, 2019 Advised client assets (CHF bn, end of period) Vontobel’s business model – Vontobel’s core capabilities are to protect and build wealth, to actively manage asset
Slide 32: All core activities with ambitious targets for 2020
All core activities with ambitious targets for 2020 WM with new ones since June 2018 July 25, 2019 Combined Wealth Management1 Asset Management Financial products NNM growth2 (in %) NNM growth2 (in %) Operating income 4-6 9.6 > 300 264.22 4-6 0.9 1H19 Target 20201 1H19 Target 2020 1H19 Target 2020 G
Slide 33: 92% of advised client assets stem from home and focus markets
92% of advised client assets stem from home and focus markets July 25, 2019 Advised client assets by client domicile as of mid-2019 (CHF bn) Home Focus markets Other markets market EMERGING SWITZERLAND GERMANY ITALY UK US Total MARKETS1 Advised client assets 90.7 25.4 11.6 19.1 17.7 30.8 17.6 212.9
Slide 34: Offering based on client-specific needs
Vontobel sets itself apart by providing an offering based on client-specific needs – an important driver of organic growth July 25, 2019 Clients are traditionally segmented by the … but Vontobel’s offering is industry according to their wealth … based on client-specific needs Ultra-high-net-worth in
Slide 35: Clients and third parties reward us for our offerings
Clients and third parties reward us for our offerings July 25, 2019 Our clients recommend us Vontobel gains external recognition – Vontobel Wealth Management has the highest Net Promoter Score1 among Swiss competitors – a strong sign of client satisfaction – More than half of our clients are promote
Slide 36: Swiss market is fragmented and undergoing structural change
Swiss market is fragmented and undergoing structural change – creating opportunities for Vontobel to accelerate growth July 25, 2019 Private banks in Switzerland Comments – Number of Swiss private banks has -32% decreased by more than 30% since 158 2011 147 138 – Structural change is expected 131 to
Slide 37: Wealth Management clearly distinguishes itself from competitors
Wealth Management clearly distinguishes itself from its competitors and attracts top-tier talent July 25, 2019 Our need-based segmentation, 3α-Investment Vontobel attracts top-tier talent Philosophy® and value-based pricing set us apart – Vontobel attracts and retains top talent – Vontobel is a pref
Slide 38: Vontobel Asset Management's client coverage
Vontobel Asset Management’s client coverage July 25, 2019 Locations: Zurich, Berne, Fort Lauderdale, Frankfurt, Geneva, Hong Kong, London, Lugano, Luxembourg, Madrid, Milan, Munich, New York, St. Gallen and Sydney 38
Slide 39: Asset management offering to financial institutions
Vontobel provides compelling asset management offering to financial institutions July 25, 2019 Vontobel’s offering for Partners across the globe rely on Vontobel’s offering asset management partners – Distinctive offering for financial institutions focusing on core competencies such as client relati
Slide 40: Leading offering and technology give Financial Products a competitive lead
Leading offering and technology, well-balanced business model and cost leadership give Financial Products a competitive lead July 25, 2019 Leading offering / technology Well-balanced business model Cost leadership Vontobel products issued – Vontobel sells volatility through leverage – Industry-leadi
Slide 41: deritrade MIP – decision-making tool for structured products
deritrade® MIP – the world’s 1st decision-making tool for designing and buying structured products using smart and crowd data July 25, 2019 Innovation cycles Benefits of Vontobel’s multi-issuer platform – deritrade® MIP provides full customization capabilities at best prices – bringing the Internet
Slide 42: Financial Products provides investment content and bespoke structured products
Vontobel Financial Products provides investment content and bespoke structured products through a well-balanced business model July 25, 2019 Capital markets Vontobel’s derivatives factory Distribution advisory Investment content Risk – Exchanges – OTC – Interbank markets Asset classes open – Fixed i
Slide 43: High quality of bond portfolio maintained
High quality of bond portfolio maintained July 25, 2019 Counterparty exposure by rating (mid-2019) Counterparty exposure by sector (mid-2019) 6% 1% 20% 19% 27% 43% 30% 54% Government /public sector bodies AAA A Other Financials AA BBB Corporate (non-financials) Note: Total issuer risk from debt inst
Slide 44: Financial Products accounts for less than one-third of capital usage
Financial Products accounts for less than one-third of capital usage July 25, 2019 Capital consumption as of mid-2019 (CHF mn) 553.2 1,184.2 581.0 397.2 257.7 250.0 0.5 178.2 38.9 183.3 123.3 258.0 71.1 186.3 2.6 0.0 71.7 84.9 65.6 167.0 24.3 49.0 8.8 0.0 Capital Combined Wealth Asset Management Fin
Slide 45: Amortization of intangibles from former acquisitions
Amortization of intangibles from former acquisitions July 25, 2019 Amortization of intangibles from former acquisitions1 (CHF mn) Comments – Amortization of intangibles includes these acquisitions: 17.1 – Commerzbank Schweiz until September 2019 14.8 – TwentyFour Asset Management until April 2020 12
Slide 46: Strategy has delivered attractive returns to shareholders
Successful implementation of Vontobel’s strategy has delivered attractive returns to shareholders for more than a decade July 25, 2019 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 of
Slide 47: Additional transparency on wealth management activities
Vontobel provides additional transparency on its wealth management activities July 25, 2019 Financial disclosure Comments Organizational set-up/ – Vontobel’s Combined Wealth Management activities Core activities consist of Wealth Management (WM) and the business IFRS reporting with External Asset Ma
Slide 48: Vontobel families hold more than 50% of share capital
Vontobel families hold more than 50% of share capital and are strongly committed to Vontobel July 25, 2019 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 43.9% Advontes AG 10.0