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Despite a challenging operating environment, LGT Group posted a solid result for the first half of 2011. Influenced by volatility on the financial markets and the strong Swiss franc, group profit fell 18% versus the prior-year period. The uncertain situation on the markets led to a decline in client activity. This also impacted results, with a drop in both income from services and trading income, while net interest income increased. Total operating income declined 5% to CHF 408 million. Total operating expense fell 2% to CHF 291 million. A 9% reduction in business and operating expenses was achieved thanks to disciplined cost management. There was a slight 1% increase in personnel expense resulting from a switch to biannual accrual of long-term compensation elements. At 71% the group’s cost/income ratio remained virtually stable versus the end of 2010.
LGT Group has a healthy balance sheet, a good liquidity profile, and solid capitalization. At 20.2% on 30 June 2011 (19.3% on December 31 2010), the group’s Tier 1 capital ratio remains very high by international standards. LGT Group’s holdings in securities issued by “PIIGS” countries currently account for only around 0.4% of total assets.
Net new money develops positively
At CHF 5.7 billion or 6.6% of assets under administration, net inflows of new money developed very well in the first six months of 2011. All LGT Group’s business areas saw net inflows in the first half of the year. Despite unfavorable currency developments, assets under administration have increased CHF 2.0 billion since the end of 2010 to CHF 88.1 billion.
In light of the difficult and volatile market environment, LGT remains cautious on the development of business over the rest of the year, but given the international diversification of its activities believes it is well positioned for the future. After the recent granting of a full banking license in Hong Kong, LGT now has a second booking platform in Asia alongside Singapore. In Liechtenstein and Switzerland, LGT is one of the first banks able to give its clients access to foreign exchange trading, deposits and investments in renminbi. The group has initiated the process of selling its subsidiary in Germany. LGT’s wealth and asset management units have received various awards again this year.
H.S.H. Prince Max von und zu Liechtenstein, CEO of LGT Group: “In every market situation, we want to be able to post good results and be a reliable and expert partner to our clients. This is something we’ve succeeded in doing both in the first half of 2011 and in previous periods. For this reason we believe we’re on the right track, and we will continue to invest in expanding our business. The results in our different fields of business and markets show that a long term strategy geared to tradition and innovation is finding a good response with both our clients and our staff.”