Vontobel Holding AG (XSWX:VONN) (Q4 2024) Earnings Call Highlights: Record Profit Growth and ...
Release Date: February 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Vontobel Holding AG (XSWX:VONN) reported a 32% increase in profit before taxes, reaching CHF 354 million, marking one of the best financial results in its history.
The company returned to positive net new money growth, with revenues increasing in both private and institutional client segments.
Vontobel Holding AG maintained a solid capital position with a CT1 ratio of 16.1%, well above the 12% target, allowing for an unchanged dividend proposal of CHF 3 per share.
Significant strategic progress was made, including two acquisitions that align with the company's strategy to enter private markets and strengthen its position with high net worth clients.
The efficiency program is on track, achieving exit rate savings of CHF 45 million, contributing to a cost-to-income ratio improvement to below 75%.
The company faced foreign exchange effects that resulted in a profit reduction of CHF 40 million due to a stronger CHF against the US dollar.
Institutional clients experienced outflows, particularly in emerging market strategies, which continue to face challenges.
The tax rate increased due to global minimum tax regulations and reduced participation exemptions, impacting profitability.
Interest income decreased by 36% due to reductions in Swiss interest rates and shifts in deposit mix, impacting overall revenue.
Despite improvements, the company still faces challenges in emerging markets, which remain unpopular among investors, affecting inflows.
Warning! GuruFocus has detected 4 Warning Signs with BOM:500238.
Q: Can you discuss potential mitigation measures for the CT1 ratio impact from Basel 3 final measures and the outlook for institutional clients in 2025? A: The CT1 ratio impact from Basel 3 is roughly 1% points. We've already implemented mitigation measures, which increased risk-weighted assets by 50 million under the old regime but will decrease them by a billion under the new regime. For institutional clients, we expect continued momentum in fixed income, with emerging markets showing early signs of interest, particularly in fixed income rather than equity. We are well-positioned to capture these flows with our strong investment teams. - Respondent: Unidentified_4 and Unidentified_3
Q: Can you explain the technical effect supporting your fee margin in asset management, and provide an outlook on achieving the 4-6% growth target in 2025? A: The margin in asset management was 37 basis points, with some year-end one-offs increasing it slightly. We are confident in achieving the 4-6% growth target, with strong interest in fixed income, asset-backed securities, and emerging market fixed income. Our strategic positioning and engagement in equity strategies also support this outlook. - Respondent: Unidentified_3 and Unidentified_4
Q: What is the expected tax rate for 2025 and beyond, and how has the structured solutions business performed? A: We expect a tax rate of around 22-23% in 2025, returning to 20% in the longer term. The structured solutions business performed well, driven by higher client activity and market volatility. We gained market share as some competitors retrenched, and the fourth quarter was particularly strong due to US elections and crypto volatility. - Respondent: Unidentified_4 and Unidentified_2
Q: Are you experiencing increased margin pressures in the structured products business? A: No, we haven't experienced increased margin pressures in structured products, and this is reflected in our results. - Respondent: Unidentified_2
Q: Can you elaborate on the measures taken to improve risk weightings under Basel 3 final, particularly in relation to structured solutions? A: We've adjusted product design and pricing to favor products with better risk-weighted asset profiles. We've also optimized our balance sheet holdings, favoring industry bonds over banking bonds. These measures were implemented early to align with Basel 3 final requirements, despite short-term disadvantages. - Respondent: Unidentified_4
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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