St.Galler Kantonalbank AG · SIX:SGKN
St.Galler Kantonalbank — H1 2010 Earnings Presentation
45 slides from St.Galler Kantonalbank's earnings presentation, August 2010
Slide 1: Strategy and half year results 2010
St.Galler Kantonalbank Strategy and half year results 2010 August 2010 1
Slide 2: Agenda
Agenda n Results 30/6/2010 n St.Galler Kantonalbank Group n Private Banking n Private Banking n Development in Private Banking n New products and intensified market development n Credit portfolio n Outlook 2
Slide 3: Overview 2010 HY1 (1/2)
Overview 2010 HY1 (1/2) n Strong net new assets n Net New Loans CHF 596.0 million (+3.2%) n Net New Money CHF 1’207.6 million (+2.9%) n Extraordinary, difficult market environment n Negative influence on interest income (-14.1%) n Positive influence on net fee and commission income (+8.0%) n Stable
Slide 4: Overview 2010 HY2 (2/2)
Overview 2010 HY2 (2/2) n High quality of the credit portfolio and continuing, risk conscious policy of granting loans n Value adjustments, provisions and losses with CHF 2.0 million on a very low level n Strong equity base n Shareholders equity of CHF 1.8 bn n 71.8% above Basel II-requirements n Ou
Slide 5: Operating profit reflects difficult financial environment
Operating profit reflects difficult financial environment CHF million 2010_HY r 2009_HY r 2008_HY Operating income 248 -8.6 % 271 1.7 % 266 Administrative expenses -141 1.1 % -140 -1.1 % -141 Gross profit 106 -18.9 % 131 4.8 % 125 Depreciation -18 -24.8 % -23 -9.5 % -26 Valuation adjustments, provis
Slide 6: Income statement – Divisional accounts
Income statement – Divisional accounts Retail- and Private Corporate SGKB commercial Banking Center Group clients 2010 2009 2010 2009 2010 2009 2010 2009 CHF million HY HY HY HY HY HY HY HY Net interest income* 72 105 10 25 60 35 143 166 Net fee and commission income 20 18 63 60 -1 -1 82 76 Net trad
Slide 7: Commission income cannot compensate interest income
Commission income cannot compensate interest income 300 5 +1.7% 7 -8.6% 13 21 5 250 18 68 48 n Decreased net interest income 200 55 28 (-14.1 %) CHF million 33 150 27 n Increased net fee and commission income (+8.0%) 100 166 n Lower administrative expenses 148 143 50 (-17.5%) 0 2008_HY 2009_HY 2010_
Slide 8: Interest curve
Interest curve n Continuing decrease and flattening of interest curve in the last 18 months. 5Y-market rate has decreased by 62 bp within the one-year period. 3.00 % 2.50 % 2.00 % 1.50 % 1.00 % 0.50 % 0.00 % 1 Month 3 Months 6 Months 1 Year 5 Years 7 Years 10 Years -0.50 % 8 31.12.2008 31.03.2009 30
Slide 9: Prior period comparison in interest income
Prior period comparison in interest income Total net interest income compared to last year: -23.4 million Balance-Sheet Transactions: -10.1 million Interest rate hedge: -13.3 million Effect of assets* Effect of price Due from banks - 600 Mio. Client Funds + 1‘100 Mio. Due from banks -0.74 % Client F
Slide 10: Client interest rates
Client interest rates n Last decrease of client interest rates in May (products „Sparen 3“, „Unica“ and savings account for elderly people) 2.5 % 2.0 % 2.000 % 1.750 % 1.5 % 1.0 % 0.655 % 0.5 % 0.484 % 0.375 % 0.125 % 0.0 % Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 09 0
Slide 11: Administrative expenses – Costs under control
Administrative expenses – Costs under control 160 n Administrative expenses on 140 -1.1% +1.1% last years level 120 n Measures have been taken 60 53 55 100 to save on projects and CHF million 60.2% ordinary administrative 80 expenses 56.0% 60 54.5% n Decrease of earnings in first 40 81 86 86 semeste
Slide 12: Increase of productivity
Increase of productivity 60 Administrative expenses / FTE 55 -7.3% TCHF 50 56 52 60 Business volume* / FTE 45 +6.9% CHF million 2005_HY 2010_HY 55 57 50 85 Personnel expenses / FTE 53 +4.2% 45 80 in TCHF 2005_HY 2010_HY 75 80 77 70 2005_HY 2010_HY n n Remarkable Remarkabledecrease decreaseofofadmini
Slide 13: Strong growth in loans to clients
Strong growth in loans to clients Retail clients +228.4 Mio. +2.2% Commercial clients +21.3 Mio. +0.4% Other +23.4 Mio. +1.7% 19'500 19'250 37.7% 19'000 250 8.3% CHF million 1.6% 73 18'750 273 19'101 18'500 18'250 18'505 18'000 Dec 31, 2009 RCB PB SGKB Hyposwiss / SGKB June 30, 2010 Loans to clients
Slide 14: Client assets – New record level
Client assets – New record level Retail clients +235.9 Mio. +2.5% Commercial clients +61.4 Mio. +2.1% Other +416.0 Mio. +126.2% 42'500 42'250 3.3% 42'000 360 -406 0.4% 5.6% CHF million 41'750 77 41'500 713 41'250 41'723 41'000 Institutional clients +62.1 Mio. +0.7% 40'980 Individuals +14.6 Mio. +0.2
Slide 15: Agenda
Agenda n Results 30/6/2010 n St.Galler Kantonalbank Group n Private Banking n Private Banking n Development in Private Banking n New products and intensified market development n Credit portfolio n Outlook 15
Slide 16: Private Banking (PB) SGKB group: Overview
Private Banking (PB) SGKB group: Overview n Strong Net New Money in Private Banking n Net fee and commission income: + 6.6% n Result influenced by market environment n Successful market entry of subsidiary in Munich n Optimization of cost structure in Hyposwiss 16
Slide 17: Private Banking (PB) SGKB Group: Results
Private Banking (PB) SGKB Group: Results CHF million 2010_HY r 2009_HY r 2008_HY Operating income 86 -11.4 % 97 -16.8 % 117 Administrative expenses -61 -2.3 % -62 25.1 % -50 Gross profit 25 -27.6 % 35 -47.8 % 67 Depreciation -1 0.9 % -1 72.2 % -1 Val. adjust., prov. and losses -2 -81.2 % -9 - -1 Ope
Slide 18: PB SGKB Group: Positive condition for growth
PB SGKB Group: Positive condition for growth CHF million 2010_HY r 2009_YE r 2008_YE Client assets 28'451 1.1 % 28'138 10.0 % 25'571 Employees (Headcount) 354 -1.8 % 361 6.3 % 339 - of which CRMs 105 -3.7 % 109 21.1 % 90 CHF million 2010_HY r 2009_HY r 2008_HY NNM (ytd) 494 37.4 % 360 -74.5 % 1'409
Slide 19: PB SGKB Group: Top Line Spread
PB SGKB Group: Top Line Spread 27'000 140 24'000 117 120 21'000 92 100 18'000 86 CHF million 15'000 88 80 28'138 28'451 bp 25'571 12'000 60 66 61 9'000 40 6'000 18 7 8 20 3'000 13% 15% 13% 0 0 2008_YE 2009_YE 2010_HY Client assets in Private Banking Discretionary mandates in % of client assets Top l
Slide 20: Client assets: Origin
Client assets: Origin Total CHF 42 bn CHF million Retail and Commercial 13'273 Banking Institutional 8'959 SGKB Banking Private Group Banking Private Banking 19'492 2010_HY Switzerland 70.2% Switzerland 41.4% Germany 7.5% Germany 13.1% Other Western Europe 7.4% Other Western Europe 14.3% Eastern Eur
Slide 21: Client assets: Currency Mix
Client assets: Currency Mix Total CHF 42 bn CHF million Retail and Commercial 13'273 Banking Institutional 8'959 SGKB Banking Private Group Banking Private Banking 19'492 2010_HY CHF 65.0 % CHF 36.9 % USD 14.4 % USD 27.9 % EUR 16.5 % EUR 28.4 % GBP 1.1 % GBP 1.9 % JPY 0.2 % JPY 0.2 % Others 2.8 % Ot
Slide 22: Agenda
Agenda n Results 30/6/2010 n St.Galler Kantonalbank Group n Private Banking n Private Banking n Development in Private Banking n New products and intensified market development n Credit portfolio n Outlook 22
Slide 23: SGKB group: Focus of Private Banking strategy
SGKB group: Focus of Private Banking strategy Location Saint-Gall, Munich Zurich, Geneva, Lisbon Strategic focus n Cognition as leading bank for n Private Banking specialist investment advice in the home within SGKB group market n State-of-the-art Investment n Establishment of a subsidiary Managemen
Slide 24: „Back to the roots“ in Private Banking
„Back to the roots“ in Private Banking Before financial crisis After financial crisis Products Complex = smart Simple, customer-friendly solutions Incentive systems Dissimilar allocation of risks Long term oriented between CRM and bank compensation models Pricing „Jungle of fees in banks“ Transparen
Slide 25: PB SGKB Group: Policy and positioning
PB SGKB Group: Policy and positioning n Customer-oriented model of advice n Long-term oriented service by same CRM n Minimal segmentation n Business policy n „Open architecture“ n No „Product-Pushing“ n Fundamentally new line-up of mandates in asset management n Simple pricing model 25
Slide 26: Agenda
Agenda n Results 30/6/2010 n St.Galler Kantonalbank Group n Private Banking n Private Banking n Development in Private Banking n New products and intensified market development n Credit portfolio n Outlook 26
Slide 27: Private Banking: New products
Private Banking: New products n Total revision of mandates in asset management n Launch of retail mandate „Futura“; asset accumulation from CHF 25‘000.- n Partnership with enterprises from the environment of University of St.Gallen n Asset Liability Management for pension funds (c-alm AG) n Institut
Slide 28: Institutional mandate: Finreon Swiss Equity Iso Pro
Institutional mandate: Finreon Swiss Equity Iso Pro n „Swiss“: 75 largest shares of Swiss stock market n „Iso“: balanced shares n „Pro“: Quantitative optimization with inclusion of minimum variance portfolios n maximum weighting of share: 5% n Investment Advisor: Finreon AG / Investment Manager: St.
Slide 29: Market development of Germany – Exemption
Market development of Germany – Exemption Intensified market development due to BaFin* exemption Offshore Banking 2 Switzerland n Events n Direct sales Onshore Banking approach 1 Germany n Marketing 29 3 Repatriation * BaFin = German Federal Financial Supervisory Authority
Slide 30: Agenda
Agenda n Results 30/6/2010 n St.Galler Kantonalbank Group n Private Banking n Private Banking n Development in Private Banking n New products and intensified market development n Credit portfolio n Outlook 30
Slide 31: Credit portfolio – Focus on home market
Credit portfolio – Focus on home market Loans to clients Total CHF 18.2 bn 4% 8% 13% Cantons Saint Gall and Appenzell Ausserhoden Neighbouring cantons (AI, GR, GL, SZ, ZH, TG) Other cantons Foreign clients 75% Focus Focuson onbusiness businessactivity activityininthe the cantons cantonsofofSaint-Gal
Slide 32: Credit risk management – Solid collateralisation
Credit risk management – Solid collateralisation Collateral character of loans to clients (Total CHF 18.2 bn) Loan-to-value ratios Mortgage cover 90% 70% Other cover 2% 61.4% 58.1% 56.3% 58.1% 60% Without cover 8% 47.6% 50% 40% 30% Collateral of mortgage loans 20% (Total CHF 16.0 bn) 10% Residential
Slide 33: Broad diversification (1/2) – Credit portfolio
Broad diversification (1/2) – Credit portfolio Loans to clients (Total CHF 18.2 bn) Corporate Business (SME) (CHF 5.4 bn) largest sectors* 4% real estate 41% 4% trading 12% finance and insurance 8% services 6% 30% 62% construction 6% metal products 3% chemical, rubber, plastic products 3% others 21%
Slide 34: Broad diversification (2/2) – No risk concentration
Broad diversification (2/2) – No risk concentration Share of 10 largest borrowers Distribution of credit portfolio by size 40% 20'000 18'205 34.6% 35% 18'000 16'000 30% 14'000 25% 12'000 CHF million 20.4% 20.5% 20% 10'000 16.8% 8'000 15% 6'000 10% 7.7% 4'000 5.6% 5% 2'000 1'018 0 0% Total loans Ther
Slide 35: Credit risk management – Steady development
Credit risk management – Steady development 800 700 1.0% 0.97% 600 500 0.90% CHF million 0.9% 400 0.85% 692 679 300 631 508 504 94.9% * 451 92.8% * 92.8% * 0.8% 200 100 183 174 180 167 175 162 65 81 80 0 0.7% 2008_YE 2009_YE 2010_HY Impaired loans Estimated proceeds from liquidation Impaired loans,
Slide 36: Agenda
Agenda n Results 30/6/2010 n St.Galler Kantonalbank Group n Private Banking n Private Banking n Development in Private Banking n New products and intensified market development n Credit portfolio n Outlook 36
Slide 37: Strategic challenges
Strategic challenges Profitabilityofof Profitability investment investmentbusiness business Interest Interestrate raterisks risks Challenges Challenges Offshore Offshoreprivate privatebanking banking Regulation Regulation 37
Slide 38: Strong equity base – BIS-Ratio
Strong equity base 25'000 23'508 23'995 15.0% 22'577 14.5% 20'000 14.0% 15'000 13.2% 13.5% BIS-Ratio CHF million 12.9% 13.0% 12.9%12.8% 11'454 13.0% 10'000 11'040 11'136 12.5% 12.5% 5'000 12.0% 1'744 1'556 1'505 1'796 1'612 1'582 1'756 1'605 1'595 - 11.5% 2008_YE 2009_YE 2010_HY Balance sheet total
Slide 39: New FINMA Capital Requirements
New FINMA* Capital Requirements n According to the discussion 800 paper of the FINMA* the SGKB 719 will be allocated in future in the 700 653 671 category with 50-60% excess New: capital requirements (Excess 600 50-60% 204 Excess above 1st pillar acc. Basle II) 500 Capital Bank-individual excess cap
Slide 40: Market environment confirms policy
Market environment confirms policy Interests 4.0 CHF Libor 3M CHF Swap 5Y n Expected increase of interest rates 3.0 cycle at the end of 2010 2.0 n Interest rate hedge conducted è short-term reduction in interest 1.0 income 0.0 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09 Jun 10 Stock market SMI DJI n Strong c
Slide 41: SGKB Group – Financial targets
SGKB Group – Financial targets Growth of loans to clients 3% Growth of client assets* 5% (Net New Money) Cost/Income-Ratio 50% Return on Equity (RoE) before taxes 15% 41 * Client assets = AuM and customer funds without double counting
Slide 42: Outlook 2010: Results below last year
Outlook 2010: Results below last year n Continuing demanding market environment n Precise forecast depends on various factors n Time and extent of increase of interest rates n Regain of investors’ trust in markets - Downsizing of high liquidity - Increase of transaction-oriented volumes n Lower valu
Slide 43: Share SGKB - Development of share price
Share SGKB - Development of share price 700 Par value reduction July 23, 2007 CHF 30.00 600 500 +193.8% 400 300 200 +12.1% 100 -33.9% 0 Vol 302001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Trading Volumenvolume SGKN (in (in 1000) 25 20 15 10 SGKB 5 SPI SPI Banks 43 0 2001 2002 2003 2004 2005 2006
Slide 44: Disclaimer
Disclaimer Caution regarding forward-looking statements – This communication contains statements that constitute "forward-looking statements", including, but not limited to, statements relating to the implementation of strategic initiatives, such as the expansion in private banking, and other statem
Slide 45: Contact
Contact St.Galler Kantonalbank St. Leonhardstrasse 25 9001 St. Gallen Switzerland www.sgkb.ch Investor Relations: Dr. Cornelia Gut-Villa [email protected] Tel. +41 (0)71 231 36 92 45
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