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Vontobel Full-Year Profit Rises 15% as Clients Add New Money

Feb. 6 (Bloomberg) -- Vontobel Holding AG, the Swiss bank and brokerage that specializes in derivatives, reported a 15 percent increase in full-year profit as the firm attracted new client funds and doubled pretax profit from asset management.

Net income rose to 130.6 million Swiss francs ($144 million) from 113.7 million francs a year earlier, the Zurich-based bank said today in a statement. That beat the 125 million-franc estimate of five analysts surveyed by Bloomberg.

“Once again strong asset-management results offset the weakness in private and investment banking,” said Eleni Papoula, a London-based analyst with Berenberg Bank. “Vontobel has no option but to become an asset manager in response to structural changes including pressure for wealth repatriation and taxation in private banking and a lack of demand for structured products in investment banking.”

Vontobel gained as much as 4.4 percent and was up 3 percent to 29.45 francs at noon in Zurich trading, valuing the company at 1.9 billion francs. The stock has surged 59 percent since the firm reported first-half results July 27.

Vontobel, majority-owned by a shareholder pool including the founding family, generates revenue from investment banking, asset management and private banking. The firm had full-year inflows of 8.6 billion francs, bringing client assets under management to 98.4 billion francs compared with the 96 billion francs reported at the end of October.

U.S. Business

The biggest advance in client funds came from the New York-based institutional business, which increased customer assets 80 percent to $36 billion, the firm said Jan. 31. Net new money from private-banking clients fell to 900 million francs from 1.1 billion francs a year earlier.

The inflows show “the trust and confidence private and institutional clients alike have in Vontobel’s investment expertise,” the firm said in the statement.

Swiss banks are trying to accumulate assets as declining revenue and an international crackdown on offshore tax evasion crimp margins. Strengthening asset-management capabilities, including services for institutional investors, will boost revenue and compensate for other business areas in decline, the Swiss Bankers Association said Dec. 6.

Vontobel is searching for acquisitions in private banking and asset management as it targets total client assets, including those held in custody and invested in structured products, of 175 billion francs by 2014, Chief Executive Officer Zeno Staub said today on a conference call with reporters.

Asset Management

The asset-management business more than doubled pretax profit to 75.5 million francs, while Vontobel followed UBS AG, Switzerland’s biggest bank, and Julius Baer Group Ltd., the nation’s third-largest wealth manager, in reporting a lower full-year profitability margin in private banking.

Operating income as a proportion of assets under management in private banking dropped to 76 basis points from 83 basis points a year earlier, with private clients still holding about 27 percent of their assets in cash, Vontobel said. Pretax profit slumped 28 percent in investment banking. A basis point is one hundredth of a percentage point.

“Private banking is almost becoming a side line,” Tim Dawson, a Geneva-based analyst with Helvea SA, wrote in a note to clients today. “The investment-banking division had a tough second half.”

To contact the reporter on this story: Giles Broom in Geneva at gbroom@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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