EANS-Adhoc: Bank Sarasin + Cie AG Half Year Results 2012 of Bank Sarasin & Co.
Ltd:
Structural pressure on earnings calls for a cautious approach
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6-month report
30.07.2012
Positive net new money inflow of CHF 0.5 billion - assets under management rise
to CHF 99.1 billion - lower asset base and cautious client investment activity
reduce operating income by 9% to CHF 330.3 million - decline of 29% in group
result to CHF 48.2 million - medium-term goals under review
Eurozone debt crisis escalation in the second quarter of 2012 did not entirely
eclipse the first quarter's positive momentum in financial markets: equity
markets finished the first half of the year in positive territory overall, with
interest rates remaining at record lows. As a result, market performance made a
positive contribution of CHF 1.9 billion to the Sarasin Group's asset base. A
slight weakening of the Swiss franc, especially against the US dollar, added
positive currency translation effects of CHF 0.3 billion. The Sarasin Group
achieved positive net new money growth of CHF 0.5 billion. At the end of June
2012, client assets managed by the Sarasin Group amounted to CHF 99.1 billion.
Income down in response to reduced asset base and cautious client investment
activity
The Sarasin Group's operating income was 9% lower than the prior-year figure, at
CHF 330.3 million. On the one hand, the revenue trend reflects cautious client
investment activity, due largely to growing uncertainty created by the
escalation of the eurozone debt crisis. On the other hand, the average client
assets on which Sarasin's business performance and revenues are based were
significantly below the prior-year level. Income from commission and service fee
activities declined by 13% to CHF 202.3 million. Net interest income was more
robust, but still fell by 6% to CHF 70.3 million. Income from trading operations
amounted to CHF 46.1 million (-10%). Ordinary trading activities on behalf of
clients along with income from trading in structured products were lower. Other
ordinary results rose to CHF 11.6 million from the sales proceeds of financial
investments.
Joachim H. Straehle, CEO of Bank Sarasin & Co. Ltd
"The Sarasin Group's financial performance for the first half of 2012 reflects
the macroeconomic environment. In addition, the implementation of our strategy
focusing on tax-compliant assets was of particular importance for us in the
reporting period. After completion of its implementation the Sarasin Group will
be in an even stronger position for the future. With Safra as a new,
well-capitalised majority shareholder, Bank Sarasin is assured financial and
operational stability."
Lower expenses despite expansion of workforce and locations
The Sarasin Group's operating expenses were 1% lower than in the first half of
2011, finishing at CHF 259.1 million. Personnel expenses were unchanged at CHF
194.3 million during the reporting period. The headcount increased by 16 since
beginning of the year. General administrative expenses were 4% lower, at CHF
64.7 million. The expansion of new locations - along with the extension of
various activities at existing locations - was more than offset by cost savings
in other areas. Depreciation and write-offs decreased by 5% to CHF 15.9 million
as a number of charges on various IT investments ended. The figure for value
adjustments, provisions and losses was CHF 1.0 million.
Capital strength unchanged - decline in group result
Due to declining revenues, the cost income ratio increased to 83.3% (1H 2011:
76.4%). The group result was 29% lower, at CHF 48.2 million, but was still
higher than the adjusted figure for the second half of 2011. At CHF 19.3
billion, the total assets carried on the balance sheet of the Sarasin Group were
10% higher than at the end of 2011. The Bank's liquidity was further improved.
Cash and cash equivalents increased from CHF 192 million to CHF 1.4 billion.
There was only a modest increase of CHF 29 million in loans to clients. The net
profit for 2011 has been allocated to the profit brought forward, which resulted
in a rise in shareholders' equity to CHF 1.4 billion. The equity ratio was
virtually unchanged at 7.0% on 30 June 2012 (31.12.2011: 7.2%). The BIS Tier 1
ratio, defined as core capital as a percentage of risk-weighted assets, comes to
15.5% on 30 June 2012.
Consistent implementation of the strategy for avoiding non tax-compliant assets
Bank Sarasin is working hard to implement its strategy for avoiding non
tax-compliant assets and intends to terminate dealings with any client for whom
the Tax Due Diligence Process cannot be completed before the end of 2012 or who
refuses to handle their assets in accordance with the tax rules applicable in
their country of domicile. For existing international clients of Bank Sarasin in
Switzerland, a comprehensive process is being introduced whereby the Bank
analyses the tax situation of the assets deposited by the client. The Process
was first developed and defined for Booking Center Switzerland in 2011 and has
been in place ever since.
Various clearly defined groups of clients are suspended from the Tax Due
Diligence Process: the Process does not affect private clients domiciled in
Switzerland, because of the duty of self-declaration for all Swiss taxpayers,
and a withholding tax. In addition, Bank Sarasin has decided - in light of
various amendments initiated at political level - to exclude from the Process
any client domiciled in a country with which Switzerland has negotiated a double
taxation agreement that provides for a final withholding tax, or which has
recently initiated tax negotiations in this area. If the agreements do not come
into force, these clients will be subject to the Tax Due Diligence Process in
accordance with Bank Sarasin's strategy for avoiding non tax-compliant assets.
Outlook for 2H 2012: cost-cutting measures introduced, medium-term goals under
review
After the difficult business performance in the first quarter of 2012, the
Management has already introduced an initial package of immediate cost-cutting
measures. On the general administrative expenses front, budgets were cut. New
CRMs will still be recruited in order to acquire new clients, while at the same
time improving efficiency in all areas of the Group. Given this backdrop, the
Board of Directors and the Management will be reviewing the existing medium-term
goals. With investors still standing on the sidelines, the Sarasin Group expects
new money growth to remain positive, but at a slightly slower pace than in
previous years.
The Half Year Report 2012 of Bank Sarasin & Co. Ltd can be downloaded from
www.sarasin.com from 7 a.m. onwards on 30 July 2012.
Further inquiry note:
Dr. Benedikt Gratzl
Head of Corporate Communications
T: +41(61) 277 70 88
Benedikt.Gratzl@sarasin.ch
end of announcement euro adhoc
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issuer: Bank Sarasin + Cie AG
Elisabethenstrasse 62
CH-4002 Basel
phone: +41 (61) 277 77 77
FAX: +41 (61) 272 02 05
mail: info@sarasin.ch
WWW: www.sarasin.ch
sector: Banking
ISIN: CH0038389307
indexes: SPIEX, SPI ex SLI
stockmarkets: official dealing/general standard: SIX Swiss Exchange
language: English