Year end results 2017: Group profit up 6.8%, dividend increased
St. Gallen, 15. February 2018
St.Galler Kantonalbank is looking back on a very successful year 2017. At CHF 156.0 million, the consolidated profit is 6.8 % higher than in the previous year. The managed assets increase by CHF 4.0 billion (+10.5 %) and reach a new high of CHF 42.4 billion. The Board of Directors proposes to the Annual General Meeting to increase the dividend by 16.7 % to CHF 17.50 per share.
Excellent credit portfolio, operating income increased
At CHF 302.0 million (prior year: CHF 300.4 million), the gross result from interest operations can be maintained at the good prior-year level, despite the persistently difficult low-interest environment. In addition, the credit portfolio continues to be in excellent condition and the early warning indicators in the lending business remain positive. For this reason, CHF 8.9 million value adjustments for default risks and losses from interest operations and provisions are dissolved (prior year: CHF 11.2 million). Thereof, CHF 0.5 million is reported in the interest operations. Because this amount is CHF 9.7 million lower than in 2016, the net result from interest operations declines by CHF 8.1 million (-2.6 %).
Due to the 10.5 % increase in managed assets and the strong investment performance, the result from commission business and services is CHF 11.5 million (+11.3 %) higher than in the previous year. Higher trade turnover and prospering markets also are the main drivers for the increase of the result from trading activities by CHF 6.7 million (+22.0 %). Based on these factors, operating income increases by CHF 11.3 million (+2.5 %) to CHF 459.8 million.
Digitalisation and 150-year anniversary cause higher operating expenses
Operating expenses are CHF 13.1 million (+5.3 %) higher than in the previous year. Personnel expenses rise by CHF 4.0 million (+2.6 %) for various reasons, such as the increase in the total payroll, a slight headcount growth, the performance-related variable compensation and the employee stock ownership plan, where the positive development of the SGKB share price causes additional cost. The future-oriented investments in digitalisation and in the 39 projects to celebrate the 150th anniversary are decisive for the increase of the general and administrative expenses by CHF 9.1 million (+ 10.3 %).
Increase of consolidated profit, higher dividend in the anniversary year
The larger operating income, the positive development of the value adjustments and the provisions in the lending business and the higher operating expenses lead to an operating result of CHF 195.8 million. It is CHF 9.3 million (+5.0 %) higher than in the previous year.
In order to ensure a general risk provision, another CHF 10.0 million are allocated to the reserves for general banking risks. The consolidated profit after taxes is CHF 156.0 million, CHF 9.9 million (+6.8 %) above the previous year. Due to this very good result, the Board of Directors will propose to the Annual General Meeting to increase the dividend per share by CHF 1.00 and, on the occasion of the 150th anniversary, to add another CHF 1.50 per share, so that a total of CHF 17.50 per share will be paid out. This corresponds to a payout ratio of 62.5 % of the consolidated profit and a dividend yield of 3.6 %, calculated at the year-end share price of 2017. The performance of the share price and the dividend proposed add to a very attractive total return of 26.6 % for the SGKB share for 2017.
Strong growth of managed assets
In 2017, the total loans to clients increase by CHF 0.6 billion (2.3 %), mainly due to the increase in mortgage loans (+2.5 %). Furthermore, the net new money of managed assets of CHF 1.7 billion (+4.5 %) is very favourable. Combined with the positive market performance, it leads to an increase in managed assets of CHF 4.0 billion (+10.5 %) to CHF 42.4 billion. Managed assets thus reach a new high and rise above the previous record level of 2010, which was before the sale of most parts of the crossborder business as part of a strategic realignment and focusing of markets. Another sign for the confidence that customers have in St.Galler Kantonalbank, is the increase in the share of discretionary mandates from 15.0 % at the end of 2016 to 17.1 % of managed assets at the end of 2017.
At the end of 2017, St.Galler Kantonalbank reports shareholders' equity of CHF 2.2 billion and eligible capital of CHF 2.5 billion. By issuing subordinated bonds, the total-capital-ratio could be raised from 15.6 % to 16.9 %. Moody's rated St.Galler Kantonalbank unchanged with Aa1.
Outlook for the anniversary year 2018
In 2018, St.Galler Kantonalbank marks its 150th anniversary with 39 anniversary projects in its market area. At the same time, the strategic projects concerning advisory competence, digitalisation and the investment business will be continued in order to provide customers with even more comprehensive advice and attractive new features. Given the current economic assessment, it is expected that the operating business will be continuing in the scope of the previous year. Overall, St.Galler Kantonalbank therefore expects a consolidated profit for the financial year 2018 that is in the range of the reported result 2017.
|in CHF million||2017||2016||change|
|Operation income||459.8||448.5||+ 2.5 %|
|Operation result||195.8||186.5||+ 5.0 %|
|Consolidated profit||156.0||146.0||+ 6.8 %|
|in CHF million||31.12.2017||31.12.2016||change|
|Balance sheet total||32'598||32'201||+ 1.2 %|
|Loans to clients||25'496||24'921||+ 2.3 %|
|Managed assets1||42'352||38'330||+ 10.5 %|
|Shareholders' equity||2'235||2'148||+ 4.1 %|
|Full-time equivalents2 in accordance
with FINMA; apprentices
calculated at 50%
1: Managed assets = Client funds (Due to clients in savings and deposits, other due to clients, medium-term notes) and assets under management. Not included are custody assets (=assets that are held solely for transaction and storage purposes and for which the Bank offers no advice to the clients).
2: average balance
St.Galler Kantonalbank AG
St. Leonhardstrasse 25
9001 St. Gallen
071 231 32 18
Contact for investors and analysts:
St.Galler Kantonalbank AG
St. Leonhardstrasse 25
9001 St. Gallen
071 231 32 04