Liechtenstein’s VP Bank Group has reported a rise in profit in H1 2021 compared to the year-ago period, which was hit by a one-off valuation adjustment of around CHF20m.

The Vaduz-based private bank also grew its assets, including contributions from the private banking activities of Öhman Bank in Luxembourg, which it acquired recently.

Key metrics

The bank’s net income stood at CHF29.9m in the first six months of 2021, a 108.3% growth compared to CHF14.4m a year ago.

Operating income was almost flat at CHF166.6m.

Income from commission business and services increased 9% to CHF78m over the period, while central bank USD and EUR interest rate cuts resulted in a 26% decrease in income from trading activities to CHF24.1m.

Operating expenses dropped around 10% year-on-year to CHF132.2m.

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By GlobalData

Excluding custody assets, client assets under management increased to CHF52.6bn as of 30 June 2021, up 11% from CHF47.4bn at the end of last year.

Net new money in the first half of 2021 was CHF700m.

Tier 1 and leverage ratios at the end of June this year were 20.8% and 7.1%, respectively.

The cost/income ratio improved to 79.4% from 87.7% in the year-ago period. Excluding valuation adjustments and losses, the cost/income ratio was 70.2% at the end of June 2021.

VP Bank CEO Paul Arni said: “The progress and milestones achieved in the first half of the year confirm the viability of our strategy. VP Bank’s 2021 semi-annual results and strong equity base form a solid foundation for the further development of VP Bank Group.”

Recent developments

In June this year, VP Bank signed an innovation partnership InvestCloud to build an open wealth service platform that supports personalised wealth management services.

The partnership is part of the bank’s Strategy 2026 to become an international Open Wealth Service provider for intermediaries and wealthy private clients.

Earlier this year, the bank acquired a stake in Chinese wealth manager Hywin as part of an ongoing partnership between the two parties.

Future targets

Revealing its five-year targets, the bank said that it aims to reach a net income of CHF100m, profit margin of more than 15 basis points, and a cost/income ratio of no more than 70% by the end of 2026.

These targets also include a tier 1 ratio of more than 20% over the cycle, as well as an annual 4% net new money growth rate, which it said “will probably not be fully achieved in the current fiscal year due to anticipated outflows in the institutional funds area”.