Van Lanschot today released its half-year results. Karl Guha, Chairman, said: “An increase in our assets under management has further strengthened our position as an independent, specialist wealth manager. Our client assets increased from €63.0 billion to €66.2 billion. Assets under management were up 8% from €50.3 billion to €54.3 billion, mainly driven by Asset Management’s net inflows of €2.7 billion and a favourable market performance of €1.6 billion. AuM at Private Banking decreased marginally. The announced acquisition of Staalbankiers’ private banking activities would add up to €1.7 billion in assets in 2017. These activities’ key features, namely client groups, client service and investment policy, are an excellent fit for Van Lanschot. As such, this would be a good example of an add-on acquisition that truly enhances our position.
“Our focus on wealth management underpins our steady results in today’s uncertain and volatile markets. Difficult markets cause our clients to proceed with caution and enter into fewer transactions – implying less commission income. In the meantime, we regularly bring our clients up to speed on the latest market developments and our long-term investment decisions, building their confidence in their chosen investment course and in their investments.
“With reduced activity in the European capital markets in the past six months, Merchant Banking returned sharply lower income compared with an exceptionally robust first half in 2015. Our niche strategy and international client base continue to put us in an excellent position to make the most of any upturn in the markets.
The continued run-off of our corporate loan portfolio, combined with the improvement in our clients’ financial positions, significantly enhanced our loan portfolio. The period ended in a net release of €1.7 million from our loan loss provisions compared with the year-earlier net addition of €31.9 million. Net profit works out at €31.5 million including a €8 million charge related to the derivatives recovery framework. Our capital position developed well and our CET I ratio progressed to 17.3%.
“Our strategy update in April 2016 marked the start of the next phase of our wealth management strategy. Under the €60 million IT investment programme, we will invest in our omnichannel service to our Private Banking clients and continue the transformation of our IT landscape. The spending programme will run up to and including 2019 and should help us cut costs in the longer term. Meanwhile, we will proceed with our specialist niche approach in our core activities and have in fact just tapped into a new niche with Merchant Banking’s Financial Institutions & FinTech.”
Private Banking sharply improves result and keeps AuM largely stable
In H1 2016, Private Banking’s underlying net result increased to €16.8 million from €4.5 million in H1 2015. Total income declined to €134.8 million (H1 2015: €140.8 million), as clients engaging in fewer transactions caused transaction fees to fall by 42%. However, this was amply offset by a sharply lower addition to loan loss provisions – €2.4 million compared with €16.1 million in the first half of 2015 – and by lower costs.
Assets under management at Private Banking decreased marginally to €17.2 billion, from €17.4 billion at year-end 2015 as a consequence of a slightly negative market performance. Assets under discretionary management were unchanged as a proportion of total AuM managed by Private Banking, at 52% (year-end 2015: 52%).
Client assets at Evi van Lanschot totalled €1.4 billion and thus held steady in volatile market conditions. Van Lanschot will continue to develop Evi as a response to the wishes of its clients, as well as to market and technological developments. June saw the launch of Evi4Kids, the investment account for minors. Evi has come out of its start-up phase – in which brand recognition was key – and has now embarked on the next phase with marketing efforts more focused on conversion of prospects into clients.
In keeping with its stated objectives, Private Banking kept its loan portfolio virtually unchanged at €8.3 billion. Once again, new mortgage business nearly offset repayments and early repayments in the first half of 2016.
Notes:
* The underlying net result in H1 2016 was the net result adjusted for the one-off charge of €8 million related to the derivatives recovery framework and the cost incurred for the Strategy 2020 investment programme.
** H1 2016 phase-in, excluding retained earnings; year-end 2015 including retained earnings.
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