Half year results 2016: Operating result increased by 7.1 %
St. Gallen, 17. August 2016
In a challenging environment, St.Galler Kantonalbank (SGKB) is well underway. Operating result has increased over the previous year at 7.1 % to approximately 90 million francs. Higher net interest income, record low credit provisions and lower operating expenses have contributed to this strong result. However, the result from commission business and services has been disappointing. Despite the pleasing increase in operating result, group net profit decreased by 10.6 million francs (-12.6 %) to 74 million francs, because an extraordinary income of around 18 million francs from the sale of the Swisscanto shares was included in the previous year’s result.
The business of St.Galler Kantonalbank in the first half year of 2016 was marked by a sustained low interest rate environment and the restraint of investors in the financial markets. Net result from interest operations was increased by 5.7 % or 8.1 million francs to 151.8 million francs. Responsible for this growth were both the increased gross result from interest operations of 6.4 million francs and the release of value adjustments for default risks (+1.7 million francs).
By contrast, the result from commission business and services was decreased by 10.5 % or 6.0 million francs, amounting to 50.7 million francs. Here, the tense situation on the financial markets became apparent: Both the number of transactions as well as lower volumes contributed to the decline in earnings.
In the last year, the result from trading activities benefited from a short lively currency trading due to the abolition of the minimum exchange rate of the Euro by January 15, 2015. The elimination of this one-off effect and the general restraints of investors led to a sharp decline in the result from trading activities by 35.4 % or 7.1 million francs to 13.0 million francs.
Since net interest income as the main source of revenue could not make up the remaining declining earning components, St.Galler Kantonalbank recorded a lower operating income of 219.4 million francs, which was 2.3 % or 5.2 million francs lower than the previous year.
Lower operating expenses
Total operating expenses amounted to 126.0 million francs and were below the previous year (-0.9 %; -1.2 million francs). This was caused by the lower general and administrative expenses of 47.9 million francs (-4.7 %; -2.4 million francs), which contained last year procedural costs of the Swiss Bank program of the U.S. Department of Justice, one-time costs associated with the strategic realignment and the integration of Vadian Bank. With 78.1 million francs, personnel expenses increased only slightly over the previous year (+1.5 %; +1.2 million francs).
Operating result significantly improved
In the first semester of 2016, operating result improved to 90.0 million francs (+7.1 %; +6.0 million francs). Consolidated profit decreased by 12.6 % or 10.6 million francs as an extraordinary income of 18.1 million francs due to the sale of the Swisscanto shares was included in the previous year.
Positive inflows in managed assets
As of June 30, 2016, loans to clients increased by 270.9 million francs or 1.1 % to 24.5 billion francs. In mortgage lending a somewhat slowdown was observed. In contrast, commercial lending remained at very low levels given the still large economic uncertainty (strong Swiss franc, Brexit referendum). The quality of SGKB’s loan portfolio still presents itself in an excellent condition, which is confirmed among others by the record low level of new provisions for credit losses.
Managed assets increased by 1.1% or 383.3 million francs to 36.6. billion francs. The decisive factors were the growth in net new money by 550.4 million francs or 3.0 % as well as the negative market performance of -0.5 % and -167.2 million francs.
Outlook financial statements 2016
With the pleasing half year results of 2016, the business of St.Galler Kantonalbank is well under way. The bank is still committed to its year forecast presented at the beginning of the fiscal year expecting a slightly higher consolidated profit than in 2015.
SGKB Group key figures
|CHF Mio.||June 30, 2015||June 30, 2016||change|
|Operating income||224.6||219.4||- 2.3 %|
|Operating result||84.0||90.0||+ 7.1 %|
|Consolidated profit||84.6||74.0||- 12.6 %|
|CHF Mio.||Dec 31, 2015||June 30, 2016||change|
|Balance sheet||31’189||31‘613||+ 1.4 %|
|Loans to clients||24’243||24‘514||+ 1.1 %|
|Managed assets||36’176||36’559||+ 1.1 %|
|Shareholders’ equity||2’075||2’068||- 0.3 %|
|Employees (FTE, apprentices calculated at 50%, average Balance)||1’065||1’055||- 0.9 %|
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).
This text is a translation from the German language, which represents the relevant Version.