Vontobel First-Half Profit Advances 20% After Client Inflows

Vontobel Holding AG, a Swiss bank and brokerage specializing in derivatives, said first-half profit increased 20 percent after attracting additional funds from institutional investors.

Net income rose to 76.1 million Swiss francs ($81.9 million) from 63.2 million francs a year earlier, the Zurich-based bank said in a statement today. Managed assets climbed 9.9 percent to 108.1 billion francs as Vontobel reported net inflows of 8.2 billion francs, with 90 percent of those in its institutional business.

Chief Executive Officer Zeno Staub is searching for acquisitions as the bank targets total client assets, including those held in custody and invested in structured products, of 175 billion francs by 2014. Earnings at its private-banking and asset-management units surged by more than a third in the first half, countering lower profit from investment banking.

“This is a strong set of numbers,” said Andrew Stimpson, a London-based analyst with Keefe, Bruyette & Woods. “Inflows in asset management were significantly above what the market was expecting and the private bank was very strong, showing a decent turnaround from the last few years.”

Vontobel climbed as much as 3.3 percent and was up 1.3 percent to 32.35 francs as of 9:55 a.m. in Zurich, valuing the company at 2.1 billion francs. The stock has increased 15 percent this year, double the gain in the 44-member Bloomberg Europe Banks and Financial Services Index.

Main Drivers

“In this fragile environment during the first half of the financial year, Vontobel delivered an excellent performance,” the firm said in the statement. “The wealth and asset management business was once again the main driver of the growth in profit.”

Total client assets were 160.2 billion francs at the end of June, Vontobel said in its financial report. Staub said he expects to meet all the firm’s 2014 targets, which include improving the cost-to-income ratio, a measure of profitability, to less than 75 percent, compared with 78 percent last year.

“We have worked on costs,” Staub told reporters on a conference call, adding he expects lower expenses in the second half of the year, compared with the first six months.

The asset management unit for institutional clients, which accounts for more than 40 percent of total assets, boosted pretax profit 34 percent to 46.4 million francs, said Vontobel, which is majority owned by a shareholder pool including the founding family.

Private Banking

Private banking’s pretax profit surged 49 percent to 30.2 percent, while earnings at the investment banking unit declined amid a “low turnover” in financial products.

Income from fees and commissions across the three business divisions jumped 26 percent, while interest income dropped 13 percent with rates at record lows, according to an investor presentation. Trading income rose 7 percent.

Vontobel reported one-time costs of 10.6 million francs for adjustments to its “cross-border business model,” in private banking, including expenses related to office closures in Austria, Italy and Dubai.

Vontobel said in February the firm was exiting the onshore market in Dubai after opening a private banking office in November 2011 and will serve Middle East customers from Geneva.

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