BCV Group turned in strong 2011 financial results, with business volumes rising sharply and revenues surpassing the 1bn mark to reach CHF 1.02bn. Operating profit increased to CHF 486m and net profit remained solid at CHF 301m. The Bank is continuing the distribution policy announced in 2008, and at the next Annual Shareholders’ Meeting, the Board of Directors will propose an ordinary dividend of CHF 22, as well as a distribution of CHF 10 per share out of paid-in reserves. This will allow the Group to return CHF 275m to shareholders.
Revenues up 2%
Total revenues were up 2% to CHF 1.02bn against the backdrop of difficult financial markets and a generally solid economic climate in Vaud and Switzerland as a whole.
Interest income edged up 1% to CHF 516m. This rise, which was smaller than the growth in business volumes, resulted from the continuing low-interest-rate environment.
Fee and commission income also rose 1%, to CHF 357m, reflecting the consolidation of Banque Franck Galland & Cie SA’s results as from 8 February 2011.
Trading income advanced 17% to CHF 115m, spurred mainly by strong customer-driven forex business.
Other ordinary income fell CHF 6m year-on-year to CHF 29m due to a base effect relating to a significant real-estate disposal in 2010.
The consolidation of Banque Franck Galland & Cie SA’s results contributed CHF 25m to total revenues.
Operating profit up slightly to CHF 486m
BCV Group continued with its cost-control strategy. Total operating expenses were up only 3% (+CHF 16m) to CHF 531m, despite the consolidation of Banque Franck Galland & Cie SA (CHF 20m). Personnel costs increased 4% to CHF 339m, while other operating expenses were practically stable at CHF 192m (+1%).
Operating profit rose 1% to CHF 486m, driven by revenue growth combined with firm cost control. The cost/income ratio stood at 60%.
Net profit of 301m
Depreciations and write-offs rose 8% to CHF 84m on the back of the consolidation of Banque Franck Galland & Cie SA. Value adjustments, provisions and losses amounted to CHF 20m. This amount includes new credit-risk provisions in the second half; H2 provisioning needs were nevertheless at a low level. The item also includes a non-recurring loss at subsidiary Piguet Galland & Cie SA.* Extraordinary income came in at CHF 17m, mainly reflecting releases of credit-risk provisions in the first half.
Despite contracting 4%, net profit remained high at CHF 301m, underscoring BCV Group's earnings capacity.
Strong rise in customer business volumes
Total assets expanded 7% to CHF 37.9bn.
Mortgage lending volumes showed a 9% rise, up CHF 1.8bn to CHF 22.1bn in a real-estate market driven by strong demand. Other loans climbed 12% (+CHF 647m) to CHF 5.9bn, underpinned chiefly by SME loans and trade finance activities.
Amounts due from banks totaled CHF 3.1bn, a rise of CHF 110m (4%). Following the Swiss National Bank’s decision to cease issuing SNB bills, cash and cash equivalents rose 340% to CHF 1.7bn, while the item money-market instruments fell 99% to CHF 28m.
On the liabilities side, customer savings deposits grew 7% (+CHF 735m) to CHF 11.6bn, which testifies to the strength of the Bank’s customer franchise.
Shareholder’s equity was stable at CHF 3.3bn. Capital ratios remained at comfortable levels, with the FINMA capital adequacy ratio at 165% and the BIS Tier 1 ratio at 16.8%.
Growth in AuM and CHF 1.1bn in net new money
Group AuM grew 1.6% (+CHF 1.2bn) to CHF 77.1bn, with the consolidation of Banque Franck Galland & Cie SA (+CHF 2.8bn) and net new money for the period (+CHF 1.1bn) offsetting the effect of declines on the financial markets.
Proposals to distribute CHF 275m to shareholders through an ordinary dividend of CHF 22 and a distribution of CHF 10 per share out of paid-in reserves
In accordance with the distribution strategy announced in 2008, the Board of Directors will submit a proposal to pay an ordinary dividend of CHF 22 per registered share at the Annual Shareholders’ Meeting on 3 May 2012 in Lausanne. It will also propose distributing CHF 10 per share by drawing on paid-in reserves. If these resolutions are approved, BCV will return CHF 275m to shareholders. The Canton of Vaud will receive CHF 185m in distributions, together with CHF 65m in cantonal and municipal taxes for 2011, for a total of CHF 250m.
Standard & Poor’s and Moody’s upgrade BCV
On 5 December 2011, Standard & Poor’s announced that it had raised BCV's long-term credit rating from AA– to AA, with a stable outlook, making BCV one of only a handful of banks not backed by a formal government guarantee to be rated AA. Rating agency Moody’s had already upgraded BCV's Bank Financial Strength Rating to the long-term equivalent of A3 from Baa1 on 12 October 2011. Moody’s also confirmed its A1 long-term rating on BCV, with a stable outlook. In upgrading BCV’s ratings, these agencies emphasized the Bank’s solid earnings capacity, which stems from its strong and stable business model and well established franchise, as well as its solid capitalization.
Innovative products and services
The launch of BCV Mobile in early December was a success, with more than 20,000 downloads so far. BCV Mobile is an e-banking application that allows iPhone, iPad and Android smartphone users to make certain types of secure transactions.
A new savings account with a preferential interest rate was rolled out on 1 July 2011. It is aimed at helping young people aged 11-19 and students under 26 to get used to managing their savings.
Finally, renovation work began on the main hall of BCV headquarters in Lausanne in Q4 2011. The work is scheduled for completion in 2013.
Successful integration of Banque Franck Galland & Cie SA
The purchase of Banque Franck Galland & Cie SA, announced in 2010, was completed on 8 February 2011. On 7 April 2011, it was merged with Banque Piguet & Cie SA to create Piguet Galland & Cie SA. The integration of teams and infrastructures proceeded as planned and the two IT systems were successfully merged by year-end 2011. Following the departure of Banque Piguet Galland & Cie SA's CEO, Chief Operating Officer Olivier Calloud was named ad-interim CEO. Piguet Galland & Cie SA is one of the leading wealth managers in French-speaking Switzerland. It provides personalized services to high-net-worth individuals in French-speaking Switzerland and intends to increase AuM over the medium term.
BCV’s solid 2011 results in a challenging market environment attest to the Bank’s strong franchise and firm position. Business development for this year is expected to trend along the same lines as in 2011, barring a significant deterioration in the financial markets and the overall economic climate and bearing in mind the limited visibility going forward.
Lausanne, Switzerland, 16February2012
2012 financial calendar:
First-quarter results press release
* Total distribution comprising an ordinary dividend of CHF 22 per share and CHF 10 per share drawn from paid-in reserves, subject to approval at the Annual Shareholders’ Meeting
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