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Van Lanschot Kempen: 2018 net profit of over €80 million

Published: 07:30 AM CET

Van Lanschot Kempen: 2018 net profit of over €80 million
Next steps in wealth management strategy defined

  • Net profit comes in at €80.3 million (2017: €94.9 million) in the wake of lower interest income among other factors. Underlying net result is €103.0 million (2017: €112.3 million)
  • Commission income up 10% on solid AuM base and robust results at Merchant Banking
  • Increased cost focus translates into lower costs in the second half of 2018 in addition to extra cost-saving measures, for which an €8.3 million restructuring charge is taken
  • €1 billion net inflows despite volatile markets; negative stock market performance pushes net client assets down to €81.2 billion (2017: €83.6 billion) and AuM to €67.0 billion (2017: €69.0 billion)
  • Fully loaded CET 1 remains strong at 21.4% (2017: 20.3%)
  • Dividend proposal of €1.45 per share (2017: €1.45 per share)
  • Next steps in wealth management strategy defined
  • Financial objectives revisited for 2023, efficiency target adjusted to 70-72%

Van Lanschot Kempen today released its 2018 annual results. Karl Guha, Chairman, said: “We look back on a solid commercial year. Our commission income was 10% up on last year and we are pleased with the €0.5 billion net inflow in assets under management (AuM) at Private Banking. Meanwhile, Asset Management reported €0.4 billion in net inflow and has landed various fiduciary mandates, including the €8.5 billion mandate awarded by Stichting Pensioenfonds PostNL, which will take effect in 2019. We are proud of the results achieved by Merchant Banking, which saw strong commission income thanks to its involvement in many transactions. Our robust capital position allowed us to pay a special capital return of €1.50 per share in December and we propose a dividend of €1.45 per share for 2018.

“But 2018 also brought challenging market conditions, such as the volatile equity markets and persistently low interest rates. Our interest income decreased and this is reflected in a lower net profit of €80.3 million for the year (2017: €94.9 million). Income from securities and associates were also lower in 2018.

“Our cost levels and efficiency ratio had our full attention in the second half of 2018. As a result, we managed to reduce costs in the second half of the year and have adopted a series of additional cost-saving measures for the period ahead, involving a restructuring charge of €8.3 million. Our efficiency ratio now stands at 79.4% (2017: 76.2%).

“Supported by our strong client relationships, we want to be a leading player in our relevant markets and regions. To get there, we have defined clear next steps in our wealth management strategy. We are looking to further accelerate our growth and will continue our organic growth by pursuing a solutions-driven approach that helps us meet the needs of our clients even better. We also want to grow by possible acquisitions. By combining our strengths and expertise we are able to offer clients the full potential of our services. Digitalisation and advanced analytics are indispensable for identifying market trends and client needs, and further improving client experience, while digitalisation also helps us to enhance productivity. To be able to fully leverage the technological potential, we are investing in the talent and skills of our employees.

“We have revisited our financial objectives and set new targets for 2023. Our efficiency target has changed to 70-72% to reflect both our profile as a wealth manager and the economic environment in which we operate. Our target for the CET 1 ratio is unchanged at 15-17% nor will we alter our 10-12% target for the return on CET 1 or the one for our dividend pay-out ratio at 50-70% (1). Coming in at 21.4% at year-end 2018, our CET 1 ratio very comfortably met our target. In the future, we will continue to optimise our capital base in terms of level and type of instrument.

“Today, we are also launching our non-financial KPIs, underlining the importance we attach to value creation in the long term.”

(1) 50-70% of underlying net result attributable to shareholders.

Read the full press release (pdf) or visit the Financial results page.