BCV Group’s H1 2020 financial results were down from the prior year but nevertheless remained solid. After a record year in 2019, net profit came in at CHF 158m, a decline of 13% from H1 2019. Revenues decreased 5%, or CHF 25m, to CHF 477m, and operating profit fell 14%, or CHF 30m, to CHF 179m.
The decline in operating profit reflects two factors stemming from the Covid-19 pandemic: a CHF 11m decline in revenues before provisions reflecting softer customer business during the period; and a CHF 20m increase in provisions and loan impairment charges for a limited number of companies in difficulty (CHF 13.5m increase relating to loans and CHF 6.3m increase relating to off-balance-sheet commitments).
Throughout the pandemic, BCV has continued to fulfill its mission as Vaud’s cantonal bank. In particular, it had granted over 6,000 Covid-19 bridge loans to local businesses at end-July, for a total of over CHF 700m.
Revenues down 5%
BCV Group’s revenues were down 5%, or CHF 25m, year on year to CHF 477m.
In the continued negative-interest-rate environment, net interest income before loan impairment charges was down 4% to CHF 242m. Net interest income fell 10% to CHF 229m, due to loan impairment charges recognized during the period. Fee and commission income decreased 3% to CHF 156m. Net trading income was bolstered by the heightened forex-market volatility, rising 22% to CHF 73m. Other ordinary income fell 32% to CHF 19m, largely reflecting a non-recurring payout received on a holding in 2019.
Operating profit at CHF 179m
Operating expenses were steady at CHF 253m (−1%), and depreciation and amortization rose 4% to CHF 37m. Other provisions and losses amounted to CHF 8m (+332%), mainly on off-balance-sheet commitments involving a limited number of client businesses experiencing difficulty. As a result, operating profit declined 14%, or CHF 30m, to CHF 179m.
That decline reflects two factors stemming from the Covid-19 pandemic: a CHF 11m decline in revenues before provisions (see footnote 1) reflecting softer customer business during the period; and a CHF 20m increase in provisions and loan impairment charges for a limited number of companies in difficulty (CHF 13.5m increase relating to loans and CHF 6.3m increase relating to off-balance-sheet commitments).
Net profit at CHF 158m
The Bank recorded extraordinary income of CHF 3m in the first half of the year and a tax expense of CHF 24m. Net profit for the period came in at CHF 158m, down 13% but nevertheless at a high level. This figure corresponds to an ROE of 8.8% – one of the highest in BCV’s peer group.
Growth in lending and deposits
Total assets grew 4% to CHF 50.3bn. Cash and cash equivalents, which are mainly held as SNB sight deposits, rose 15% to CHF 9.6bn. Mortgage lending expanded 1.5%, or CHF 403m, to CHF 27.4bn. Other loans increased 2% to CHF 5.9bn, primarily as a result of Covid‑19 bridge loans.
On the liabilities side, customer deposits grew 2%, or CHF 671m, to CHF 33.7bn. Personal banking and SME deposits rose, while large corporate deposits fell.
Decrease in AuM
As a result of the challenging financial-market conditions, the Group's assets under management contracted 2% to CHF 95.9bn. Net new money totaled CHF 862m, primarily from retail and private banking, SME, and institutional clients, and largely offset the CHF 1.1bn transfer of Swisscanto funds to ZKB following ZKB’s acquisition of Swisscanto.
CHF 310m paid out to shareholders
In accordance with its dividend policy, BCV returned CHF 36 per share to its shareholders in May, for a total payout of CHF 310m. The distribution was up CHF 1 per share on the prior year and represents a total dividend yield of 4.6% based on BCV’s 2019 closing share price.
Solid financial position
The Bank’s total capital ratio stood at 17.9% at 30 June 2020 and shareholders’ equity amounted to CHF 3.4bn, attesting to BCV’s financial solidity. In the first half of the year, Standard & Poor's once again reaffirmed its AA rating for BCV with a stable outlook, and Moody's maintained its Aa2 rating, also with a stable outlook.
A rising share price and 10-for-1 stock split
The BCV share gained 17% in the first half, resulting in a total shareholder return of 21%. This makes it one of the best-performing banking stocks on the SIX Swiss Exchange. The BCV share was added to the MSCI World Index on 29 May 2020 and the STOXX Europe 600 Index on 22 June 2020, reflecting its high trading activity and strong gains over the past few years. BCV carried out a 10-for-1 stock split on 28 May 2020, making its share more attractive to private investors.
Fulfilling BCV’s mission as Vaud’s cantonal bank throughout the pandemic
The Bank adopted special measures in the first half of the year to protect its customers and employees, while continuing to provide a full range of banking services to the people and businesses of Vaud. For instance, customers were able to use BCV’s various remote banking channels to carry out their day-to-day transactions and speak with their advisors, demonstrating the effectiveness of BCV’s multichannel approach. To help support local SMEs, the Bank suspended the 31 March and 30 June principal payments on their loans, leaving those firms with over CHF 40m of additional cash (see the press release from 19 March). BCV also worked intensely with four other Swiss banks and the Swiss federal authorities to develop the federal Covid-19 bridge-loan program that is supplying businesses with essential working capital during the pandemic. At end-July, BCV had granted over 6,000 of these bridge loans for a total of over CHF 700m.
Barring a significant deterioration in the financial markets and/or the overall economic situation in the second half of the year, FY 2020 results are expected to be in line with those recorded in the first half.
Lausanne, Switzerland, 20 August 2020
18 February Full-year 2020 results
29 March Publication of the 2020 Annual Report (on www.bcv.ch)
29 April Annual Shareholders’ Meeting in Lausanne
19 August Half-year 2021 results
Banque Cantonale Vaudoise – Contacts
Daniel Herrera, Communications Director
Tel.: +41 21 212 28 61
Gregory Duong, Investor Relations
Tel.: +41 21 212 20 71
Note to editors:
This press release is being issued outside the trading hours of the SIX Swiss Exchange in order to comply with the principles of ad hoc disclosure pursuant to the SIX listing rules.
The above text is a translation of the original French document; only the French text is authoritative.
Revenues before provisions = Total income from ordinary banking operations – Loan impairment charges/reversals