The «Princely Bank» LGT was unable to match the «exceptionally good» results of the previous period in the first half of 2024, as stated in its release on Monday. The LGT Group's profit amounted to 174.6 million Swiss francs, a decrease of 22 percent compared to the first half of 2023. LGT had already reported a decline in profit for the full year of 2023.

Even though the bank, headquartered in Vaduz, specializes in asset management for private and institutional clients (and not in mortgage and other loan issuance), the «normalization» of the interest rate environment – following the Swiss National Bank's interest rate cuts in March and June after a significant rise the previous year – negatively impacted its results. Interest income dropped by 30 percent to 192.3 million Swiss francs.

Solid Core Business

The commission and service business performed better, with LGT earning 852.4 million Swiss francs, an increase of 15 percent. The bank attributed this to «higher brokerage income and increased investment and administration fees.» Trading income and other revenue increased by 10 percent to 239.1 million Swiss francs, thanks to active client trading and a higher asset base due to the favorable market conditions. LGT also noted that interest and valuation effects on the bond portfolio had a positive impact.

Net new money inflows amounted to 8 billion Swiss francs, which is only half the amount seen in the previous period. However, that figure had been skewed by a one-time inflow from a large pension fund client (6.7 billion Swiss francs, as reported by finews.com at the time). In addition to net new money inflows, positive market developments and foreign currency effects (due to a weaker Swiss franc) contributed to a 13 percent increase in assets under management, bringing the total to 356 billion Swiss francs.

Rising Expenses

Operating expenses also rose significantly. Personnel expenses increased by 12 percent to 767.2 million Swiss francs, attributed to continuous staff growth in client advisory, product, service, and technology areas, while accruals for long-term compensation components were lower than in the previous year. The bank now employs 5,852 people across its 50 global locations, up from 5,638 a year ago.

Administrative expenses also rose sharply, increasing by 11 percent to 224.5 million Swiss francs, largely due to higher IT expenses for digitalization projects.

Continued International Growth

The bank, owned by the Princely Family of Liechtenstein, saw a slight increase in total assets, now approaching 60 billion Swiss francs. The Common Equity Tier 1 (CET-1) ratio decreased from 19.9 percent to 19 percent.

Looking ahead, LGT made it clear that it intends to maintain its long-standing international growth strategy but remained noncommittal on specifics. The recent expansion in Germany with four locations in Hamburg, Frankfurt, Cologne, and Düsseldorf is said to be delivering «positive momentum». In the UK, the ongoing integration of abrdn’s British wealth management business (whose unusual name continues to be a topic of conversation, as finews.ch reported) – which has been included in LGT's numbers since September 2023 – has further expanded the bank's presence, putting it in a strong position to grow in regions outside London. LGT also reports «very favourable» developments in Australia and Asia.

The only somewhat concrete message in the outlook that might please the Princely Family is that LGT sees itself as «well-positioned to achieve further growth and to strengthen profitability, leveraging its significantly increased asset base over the past few years while making further targeted investments, particularly in digitalisation.» The bank from Liechtenstein now needs to demonstrate that it can fulfill this promise soon.