Vontobel Holding AG (VONN), the Swiss asset and wealth manager that’s trying to expand its structured-products business, said its performance for the first six months of 2014 may be weaker than that of last year.
“In light of the performance in the first three months, our assumption is that we will not quite be able to match the strong showing from the first half of 2013 in the first half of this year,” Chief Executive Officer Zeno Staub said in an e-mailed statement after the company’s annual shareholder meeting in Zurich yesterday evening.
Staub said that while the first quarter was “challenging” he expects a “solid” performance from Vontobel’s asset management business, even as some investors continued to reduce their asset allocations to emerging markets. Profitability in private banking will be “fairly stable” and the firm made progress in investment banking with its deritrade online derivatives service this year, Staub said.
Vontobel, majority owned by a shareholder pool including the founding family with the same name, reported an unexpected drop in full-year profit on Feb. 7 after one-time charges at its private bank and weaker client inflows in the second half of the year. A slowdown in emerging-market growth bruised the firm’s performance in the second half as investors around the world sold off currencies, stocks and bonds in developing nations.
While Vontobel is trying to attract more banks to use its online products service known as deritrade, after Societe Generale SA, Morgan Stanley and Deutsche Bank AG started using the platform, the company reported “subdued demand” for structured products in 2013.
“The stock is currently facing headwinds in asset gathering in emerging markets and the efforts in the investment-banking business are unlikely to bear fruits in the immediate future,” Alevizos Alevizakos, a London-based analyst at Mediobanca SpA, wrote in a note to clients on April 1 before the shareholder meeting. “The lack of urgency in using the excess capital weighs heavily on the stock.”
Mediobanca cut its rating on Vontobel to neutral from outperform, Alevizakos said in the note, leaving two of 12 analysts surveyed by Bloomberg recommending buying the shares. Vontobel dropped 5.8 percent to 34.80 Swiss francs this year as of the close of trading in Zurich on April 1. The stock climbed 27 percent in 2013.
Staub has been searching for acquisitions for at least 2 1/2 years as the bank targets total client assets, including those held in custody and invested in structured products, of 175 billion francs ($198 billion) this year, compared with 163.1 billion francs as of Dec. 31.
Vontobel is keeping about 500 million francs to 600 million francs for potential acquisitions, Chief Financial Officer Martin Sieg Castagnola told reporters on Feb. 7.
A majority of shareholders approved the aggregate compensation of the board of directors and executive management in a binding vote at yesterday’s meeting. Such votes on compensation will be mandatory under Swiss law from 2015.
To contact the reporter on this story: Giles Broom in Geneva at email@example.com