St.Galler Kantonalbank AG · SIX:SGKN
St.Galler Kantonalbank — FY2012 Earnings Presentation
34 slides from St.Galler Kantonalbank's earnings presentation, Feb 13, 2013
Slide 1: St.Galler Kantonalbank Year end results 2012
St.Galler Kantonalbank Year end results 2012 February 13, 2013 1
Slide 2: Agenda
Agenda Results December 31, 2012 Balance sheet quality Outlook 2
Slide 3: Overview: Significant group net profit increase by 11.5%
Overview: Significant group net profit increase by 11.5% n Operating income significantly higher than the previous year (+4.9%) n Interest income is an important pillar (+8.4%) n Administrative expenses significantly reduced (-3.1%) n Gross profit increase reflects strong operating performance (+17.
Slide 4: Continued falling and flattening interest rate curve
Continued falling and flattening interest rate curve Market performance 2012 Interest rates 2012 Exchange rates 2012 indexed Dec 31, 2011 1.0% 1.4 130 EUR SMI CHF Libor 3M 3M LIBOR 1.3 USD Euro Stoxx 50 CHF Swap 5 Y 5 Jahresswap 120 0.8% 1.2 110 0.6% 1.1 1.0 100 0.4% 0.9 90 0.2% 0.8 80 0.0% 0.7 Dec
Slide 5: Group net profit increased to CHF 151 million
Group net profit increased to CHF 151 million CHF million 2010_YE r 2011_YE r 2012_YE Operating income 489 -2.4 % 478 4.9 % 502 Administrative expenses -277 4.3 % -288 -3.1 % -280 Gross profit 213 -10.9 % 190 17.1 % 222 Depreciation -35 -14.0 % -30 3.7 % -31 Valuation adjustments, provisions and los
Slide 6: Higher operating income due to interest income
Higher operating income due interest income 600 n Operating income: +4.9% Σ 489 Σ 502 Σ 478 7 5 4 n Interest income: +8.4% 500 +4.9% -2.4% 45 37 39 n Higher volumes in the balance 400 sheet business 138 CHF million 158 145 n Lower costs for interest hedging 300 despite higher volume 200 n Net fee an
Slide 7: NNM: Inflows in the home market, outflows abroad
NNM: Inflows in the home market, outflows abroad Retail clients +307 million +3.2% Commercial clients +346 million +10.3% Other +54 million +17.7% 38'500 +5.3% -139 38'000 -0.9% 707 854 -749 CHF million 37'500 38'158 -7.6% 37'000 37'485 Institutional clients +76 million +1.3% Individuals -215 millio
Slide 8: Origin of managed assets
Origin of managed assets Total CHF 38.2 billion* Retail and Commercial 13.9 Banking Institutional SGKB 6.4 Banking Private Group Banking Private 18.1 Banking Switzerland 72.0% Dec 31, 2012 Switzerland 49.4% Germany 7.6% Germany 13.8% Other Western Europe 7.4% Other Western Europe 13.7% Eastern Europ
Slide 9: NNM business with strong growth in home market
NNM business with strong growth in home market Net New Money Net New Money Origin Units* Total CHF -177 million Total CHF -177 million* 886 707 -281 -139 -203 -34 -56 -749 -490 Others Net New Money RCB Middle- and South America Net New Money Hyposwiss ZH, GE, SGKB DE Eastern Europe Other Western Eur
Slide 10: Fee and commission income: AuM margin slightly increased
Fee and commission income: AuM margin slightly increased Asset allocation of managed assets Total 38.2 billion Bonds n Asset Allocation: 15% 14% Shares n Decline AuM by 5.0% 22% Structured products n High liquidity 3% 16% Funds (incl. funds accounts) n AuM Margin*: 3% Saving deposits n With 68bp sli
Slide 11: Net New Loans: Measured growth in retail clients
Net New Loans: Measured growth in retail clients Retail clients +466 million +4.2% Commercial clients +461 million +7.8% Others +38 million +2.0% 22'400 5.3% 5.1% 1.6% 46 58 22'200 19 22'000 CHF million 21'800 965 22'360 21'600 21'400 21'200 21'271 21'000 Dec 31, 2011 Retail and PB parent Hyposwiss
Slide 12: Quality of credit: 92% secured loans
Quality of credit: 92% secured loans Collateral character of loans to clients Type of mortgage Total CHF 19.1 billion 100% 2% 1% 12% 10% 9% 10% 8% 8% 8% 8% 8% 8% 6% 6% 6% 4% 5% 6% 5% 5% 5% 7% 80% 8% 7% 60% 40% 83% 85% 85% 83% 86% 86% 88% 87% 86% 87% 20% 82% 0% 2003 2004 2005 2006 2007 2008 2009 2010
Slide 13: Mortgages largely covered by marketable real estate
Mortgages largely covered by marketable real estate Average loan to value Reinsurance arrangements of residential mortgage loans 16'000 14'355 70% 64.7% 64.7% 63.3% 63.0% 14'000 60.6% 60% 12'000 CHF million 49.7% 47.7% 50% 10'000 40% 8'000 30% 6'000 20% 4'000 10% 2'000 778 54 0% 0 Residen- Residen-
Slide 14: Regional hotspots of real estate market
Regional hotspots of real estate market Watchlist regions risk regions 14 Source: UBS Swiss Real Estate Bubble, Index: 4. Quartal 2012
Slide 15: Quality of credit: Indicators remain very positive
Quality of credit: Indicators remain very positive 800 1.0% 700 0.9% 600 500 0.79% 0.8% CHF million 400 0.70% 675 659 673 0.7% 300 90.1% * 503 0.65% 486 87.6% * 494 79.6% * 200 0.6% 100 173 156 170 149 181 144 66 48 56 0 0.5% 2010_YE 2011_YE 2012_YE Impaired loans Estimated proceeds from liquidation
Slide 16: Overview interest Income
Overview interest Income n Historically low interest rates n Reduced interest income at extension of expiring fixed-rate mortgages n Reduced funding and hedging costs n Higher interest rate risk as a result of the increasing maturity mismatch between assets and liabilities à rising demand for hedgin
Slide 17: Balance sheet business neutral: Lower hedging costs
Balance sheet business neutral: Lower hedging costs Actual comparison (December 31, 2011 à December 31, 2012) Material volume effects* Material price effects Due from Due to Due from Client banks + 370 million banks +320 million banks -0.13% funds +0.09% Loans - Savings and Loans Client to clients +
Slide 18: Interest income: Hedging is necessary
Interest income: Hedging is necessary Market interest rates 4.0% 3.0% 2.0% 1.0% n Customer behaviour n Borrowers: 0.0% 2007 2008 2009 2010 2011 2012 long-term interest fixing CHF Swap 5Y CHF Swap 5Y (avg.) n Investors: CHF LIBOR 3M short-term interest fixing Client interest rates n Consequences 5% n
Slide 19: Low interest rates used to make additional hedges
Low interest rates used to make additional hedges 3.00 CHF Swap 2Y CHF Swap 5Y 2.50 CHF Swap 7Y CHF Swap 10Y 2.00 Zinssatz in % 1.50 1.00 0.50 0.00 -0.50 Jan Feb Mrz Apr Mai Jun Jun Jul Aug Sep Okt Nov Dec Dez Jan Feb Mrz Apr Mai Jun Jun Jul Aug Sep Okt Nov Dec Dez 11 11 11 11 11 11 11 11 11 11 11 1
Slide 20: Interest rate hedging costs
Interest rate hedging costs The existing swap portfolio, plus various measures taken, have led to the following portfolio: Ø Portfolio swaps hedging Ø Carry Income (expenses) Payer CHF 8.3 billion -0.95 % CHF -78.8 million Receiver CHF 3.5 billion 1.93 % CHF 67.8 million Unwindings/swaptions premium
Slide 21: Interest income: Deposit business suffers from interest level
Interest income: Deposit business suffers from interest level Development of Interest income (applying the funds transfer pricing method): Interest margin contribution and term transformation contribution 400 n Too high interest on savings and 350 deposit funds 300 n The deposit interest margin CHF
Slide 22: Sustainable lower administrative expenses (-3.1%)
Sustainable lower administrative expenses (-3.1%) 350 n Lower personnel expenses (-1.8%) Σ 288 Σ 280 300 Σ 277 n Other operating expenses reduced 4.3% -3.1% by 5.0% 250 104 111 106 n Strict cost control also in the future CHF million 200 n Cost/Income-ratio parent company 150 63.1% 48.7% 59.7% 100 5
Slide 23: Agenda
Agenda Results December 31, 2012 Quality of balance sheet Outlook 23
Slide 24: Quality of balance sheet: Stable risks
Quality of balance sheet: Stable risks Total due from banks Distribution CHF 2.1 billion Rating (Moody‘s) n Excellent quality of portfolio 0% 0% (Triple A to single A) 9% Triple A n Counterparty risk broadly Double A diversified 51% Single A n Still low limits for banks in PIIGS 40% Single B countri
Slide 25: Quality of balance sheet: Stable risks
Quality of balance sheet: Stable risks Total financial investments Distribution CHF 1.8 billion Rating* n Bonds 71% 1% n Loans secured Triple A by mortgages 20% (Pfandbriefe) 28% Double A n Shares and 49% Single A properties for resale 1% 30% Triple B Regions 13% Switzerland / Liechtenstein 2% Europ
Slide 26: Quality of balance sheet: Strong equity base
Quality of balance sheet: Strong equity base 30'000 15.0% 27'638 14.7% 26'074 14.4% 25'000 24'382 14.5% 14.0% 20'000 13.5% CHF million Tier-Ratio 15'000 12.9%12.8% 13'888 14'316 13.0% 12'826 12.6% 10'000 12.3% 12.5% 5'000 12.0% 1'830 1'652 1'644 1'863 2'002 1'714 1'934 2'100 1'810 0 11.5% 2010_YE 20
Slide 27: Quality of balance sheet: Strong equity base
Quality of balance sheet: Strong equity base 2'500 14.4% 14.7% 12.9% 12.6% 12.3% 12.8% 2'000 384 338 1'500 555 572 CHF million 500 (150%) (150%) 192 1'000 (120%) 2'002 2'100 1'652 1'110 1'144 500 960 0 2010 2011 2012 eligible capital required capital minimal FINMA-requirement surplus over minimal FI
Slide 28: Surplus capital: Impact of Basel III
Surplus capital: Impact of Basel III 1'200 1'000 800 326 520 464 384 CHF million 58 600 56 (155%) 1'056 (155%) 956 400 572 572 535 535 (150%) (150%) (150%) (150%) 200 0 2012 2012 pro forma acc. to Basel II acc. to Basel III capital surplus minimal FINMA-requirement plus 1.00% anti-cyclical buffer on
Slide 29: Agenda
Agenda Results December 31, 2012 Quality of balance sheet Outlook 29
Slide 30: Outlook 2013 - Group net profit in line with the previous year
Outlook 2013 - Group net profit in line with the previous year n Continued economic uncertainty n Recovery of the financial markets depends on the following points: n Solution of state indebtedness in the Euro area n Solution of debt ceiling in the U.S. n Development of major currencies USD and EUR
Slide 31: SGKB Group: Mid-term financial targets
SGKB Group: Mid-term financial targets Net New Loans in % total loans to clients 3% Net New Money in % managed assets* 5% Cost/Income-Ratio 55% Return on Equity (RoE) before taxes 10%** 31 * Managed assets = AuM, client funds and fund assets minus double counting ** previously 12%
Slide 32: Share SGKB: Development of share price
Share SGKB: Development of share price 700 Par value reduction Jul 23, 2007 CHF 30.00 600 500 400 +145.6% 300 +37.05% 200 100 -48.9% 0 Vol 302001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 TradingSGKN volume Handelsvolumen Volumen (in (in 1000) (in 1000)1000) 25 20 15 10 SGKB 5 SPI 0 SPI
Slide 33: 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 34: Contact
Contact St.Galler Kantonalbank St. Leonhardstrasse 25 9001 St. Gallen www.sgkb.ch Investor Relations: Dr. Cornelia Gut-Villa [email protected] Tel. +41 (0)71 231 36 92 34
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