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Total operating income increased 13% overall to CHF 883 million. Earnings were held back by low interest rates and the strength of the Swiss franc against the euro and US dollar. Offsetting these developments was a general pick-up in client stock market activity over the course of the second six months. In this environment LGT’s net interest income declined 42%, while income from services increased 17%. Income from trading activities and other operating income was up 58%, thanks in particular to realized gains on securities and currency hedges.
In 2010 total operating expenses came to CHF 683 million, an increase of 18%; net of the EUR 50 million payment to the German authorities (data theft case), the increase was 7%. Personnel expenses were up 6%, and business and operating expenses increased 11%, primarily due to the integration of Dresdner Bank (Switzerland) with LGT, and ongoing investment in implementing the group’s international expansion strategy. The cost/income ratio improved, declining from 74% to 70%.
In 2010 LGT released part of the tax provisions made in 2009 in connection with the acquisition of Dresdner Bank (Switzerland) and tax changes in Liechtenstein. The result was a reduction in the tax charge in the year under review. LGT Group posted a group profit of CHF 148 million for the 2010 financial year after CHF 106 million in 2009 (an increase of 40%). Group equity capital grew 4% to CHF 3.1 billion. With a Tier 1 capital ratio of 19.3% on 31 December 2010 (versus 18.5% at the end of 2009), the company is very well capitalized and has a very good liquidity profile.
Net new money develops positively
Net asset inflows came to CHF 3.1 billion in 2010. At year end client assets under administration stood at CHF 86.1 billion. Substantial inflows in the Asian markets and the onshore private banking operations contributed significantly to this result. Inflows in our institutional asset management and the fund business were mainly driven by the good long-term investment performance. LGT was named “best group - large overall” in Germany and Austria by the Lipper fund awards and was elected “Private Equity Fund-of-Funds Manager of the Year” for the fifth consecutive time by the leading industry platform Global Pensions.
LGT has made a good start into 2011, and intends to move forward with its strategy of expansion and diversification. H.S.H. Prince Max von und zu Liechtenstein, CEO of LGT Group, is satisfied with the group’s performance, and believes it is well positioned going forward: “LGT Group put in a solid performance in 2010. Particularly positive were the substantial inflows of new money. On the wealth management side our international business made good progress, especially in Asia, where LGT employs around 200 people and has a local presence going back more than 25 years. In Switzerland the integration of Dresdner Bank (Switzerland) into our local organization in 2010 went very smoothly. In asset management we also operated successfully, and opened an office in Frankfurt specializing in traditional investments to further accelerate institutional sales to third-party providers. In 2011 we plan to continue qualitatively strengthening our position in all the markets and fields of business in which we operate, keeping a tight rein on costs and further improving profitability. Negotiations with Deutsche Bank on the planned takeover of BHF-Bank are progressing according to plan.”