Küsnacht, July 28, 2017
Bellevue Group increases client assets to CHF 11.8 bn and triples consolidated net profit
- Group operating profit surges 73% to CHF 11.7 mn
- Group profit after tax of CHF 9.8 mn including restructuring charges
- Client assets increased 12% to CHF 11.8 bn
- Net new money of CHF 574 mn, of which CHF 325 mn from new private clients
- Asset Management generates CHF 13.7 mn in operating profit due to stronger business platform
- Bank am Bellevue nearly reached the breakeven point despite restructuring
- Strengthening of Executive Board and Board of Directors
During the first half of 2017, Bellevue Group focused its profile as an innovative investment management boutique. Its focus on asset and wealth management services is generating a steady payback. The positive market trends since the beginning of the year, fanned by a moderate global economic upturn, persisting low interest rates and relatively firm oil prices and the generous flow of liquidity from major central banks, provided the Group's good operating performance in the first half an additional boost. Financial markets around the world were buoyed by this general environment and the key healthcare sector, biotechnology stocks in particular, staged a recovery.
Bellevue Group focused on asset and wealth management business
With the restructuring of Bank am Bellevue and the ensuing discontinuation of the brokerage and corporate finance business in the first half of 2017, Bellevue Group is now clearly focused on asset management and wealth management. The bank has largely concluded its realignment due to constructive collaboration between all parties involved. Non-recurring restructuring expenses of CHF 5.5 mn (gross) were charged to the first-half accounts. Bank am Bellevue's strategic focus is on wealth management going forward. Bellevue Investment Partners, a unit of Bank am Bellevue, provides classic portfolio management services, comprehensive asset structuring and consolidation solutions and family office services for entrepreneurial private clients. Bank am Bellevue still offers custody, trading execution and market-making services.
Client assets at new record high - substantial inflow of net new money
Bellevue Group's diverse investment expertise, enlarged product range and greater presence in key markets have made the firm even more attractive to clients in its domestic and international markets. Client assets at Bellevue Group rose by 12% to a new record high of CHF 11.8 bn during the first half. About CHF 8.6 bn of this sum was related to the Asset Management segment and CHF 3.2 bn (incl. custody assets of CHF 1.4 bn) to Bank am Bellevue. This positive growth is attributed to market developments and investment performance (CHF 653 mn) and to a significant increase in net new money of CHF 574 mn, which corresponds to an annualized net new money growth rate of 10.9%. That rate is within the targeted annual organic asset growth of 5% to 10%.
Asset Management (including StarCapital) and Bank am Bellevue contributed almost equally to the newly acquired client assets. Led by the BB Global Macro Fund, which continues to attract substantial amounts of new money from clients in and outside Switzerland, new money growth was broad-based and underpinned by the broad range of available investment products. There was also strong demand for Bellevue's healthcare and entrepreneur equity strategies, and for StarCapital's fixed-income and multi-asset investment solutions. BB Healthcare Trust, an investment trust listed in London in December 2016, witnessed sustained inflows as well. Although Bellevue Investment Partners was still preoccupied with the establishment of its wealth management services during its initial months of operation, clients already entrusted the team with assets of about CHF 325 mn.
Increase in client assets fueled by profit growth - earnings sustainability improves further
A slight pick-up in economic activity, the general trends on financial markets and the increase in assets under management contributed to Bellevue Group's growing profits during the first half of 2017. Supported by a sharp rise of the income from commissions and fees, the main source of Group income, operating profit increased significantly by 50% to CHF 46.8 mn. Recurring revenues as a percent of total revenues rose year-on-year and now stands at 78%, a level that is likely to be sustained going forward. As for transaction-driven income, the trading operations, which have been retained, showed a promising trend. Income from the Brokerage and Corporate Finance units, which contributed around CHF 5 mn to the bank's revenues thanks to the successful conclusion of the final capital market transactions, will be absent in future reporting periods, though.
Gross restructuring charges of CHF 5.5 mn (offset by CHF 1.5 mn in past service cost including effects of curtailment and loss from non-routine pension plan settlements) at the bank and the increase in personnel expenses at Asset Management, which reflects the acquisition of StarCapital and performance-based compensation, stand out on the cost side. Total operating income at Bellevue Group amounted to CHF 11.7 mn, a substantial increase of 73% compared to the previous year. Profit after tax amounted to CHF 9.8 mn, which is almost three times the figure reported for the prior-year period. After the completion of its restructuring, Bellevue Group's work force ended up at 93 at the end of June 2017 (full-time equivalents, end 2016: 111).
André Rüegg, CEO of Bellevue Group, on the interim results for 2017: "The half-year results confirm that Bellevue Group has reached a new performance level as a highly focused asset management boutique. Our growing set of investment skills and our innovative offering for entrepreneurial private clients will enable us to address new client groups and strengthen our earnings power. The substantial increase in assets under management and the Group's greater appeal to institutional and private clients alike represent a strong platform for Bellevue Group's future growth."
Broad range of first-rate portfolio management services and products
In addition to its flagship product BB Biotech AG, Bellevue Asset Management offers a wide selection of healthcare and specialized regional strategies and, thanks to the acquisition of StarCapital, a number of successful multi-asset, global equity and global bond investment vehicles. All teams delivered another convincing investment performance for investors, building on their active management approach. Most of the investment products achieved double-digit returns in absolute terms over the first half and outperformed their benchmarks by a wide margin. Asset Management's operating revenues were again sharply higher at CHF 36.0 mn (+49%). Despite a 53% increase in costs attributable to the integration of StarCapital and performance-based compensation plans, the segment's operating profit of CHF 13.7 mn topped the year-ago figure by no less than 44%.
For Bank am Bellevue, the first half of 2017 was dominated by the discontinuation of the Brokerage and Corporate Finance activities. A constructive dialog between all parties and a good project management team enabled the restructuring of the bank to be concluded on schedule. Commission income from the Brokerage unit declined, as expected in light of the restructuring project. Due to the successful conclusion of the remaining capital market transactions, the solid performance of the continuing trading activities for private and institutional clients, and initial income from the recently launched private client business, the bank's running costs and the one-time restructuring costs were well absorbed. Bank am Bellevue nearly reached the breakeven point during this turning point in its development.
New members for future expansion of wealth management business recruited
Bellevue Group's investment management expertise is being further strengthened by the strategic focus on the asset management and wealth management business. The Board of Directors has appointed Thomas Pixner CEO of Bank am Bellevue and a member of the Executive Board of Bellevue Group, effective February 1, 2018, at latest. It will also recommend the election of Veit de Maddalena as a new member of the Board of Directors at the Annual General Meeting in March 2018. Thomas Pixner (55) has held various executive positions in international wealth management over the past 20-plus years. He most recently served as a member of the Executive Committee Wealth Management & Trust and Head Investments Switzerland at Rothschild & Co. Veit de Maddalena headed for years the Wealth Management & Trust division, was a member of the Group Management Committee of Rothschild & Co. and served as Chief Executive Officer of Rothschild Bank AG, Zurich. He most recently held of the position of Executive Vice Chairman of Rothschild Bank AG, Zurich. Thanks to their extensive knowledge and experience in international wealth management, both will promote the new strategy for Bank am Bellevue and accelerate the extension of the wealth management activities for entrepreneurial private clients in in a joint effort with the existing team.
Bellevue Group has steadily realigned its operations over the past three years to address the new reality in the financial industry. It now operates as a pure-play asset and wealth manager. Bank am Bellevue's wealth management and investment advisory services for entrepreneurial private clients were successfully launched and business is gaining momentum. Nevertheless, more time will be needed for the bank to produce the envisioned results under the new strategy. The set goals will be pursued through both organic growth and selective acquisitions. In Asset Management, Bellevue Group will introduce new client groups to the potential offered by the enlargement of its investment and product expertise and thereby attract more client assets.
The full report for the first half of 2017 is available at www.bellevue.ch
Media / Investor Relations: Daniel Koller, CFO
Telephone +41 44 267 67 00, Fax +41 44 267 67 01, [email protected]
Bellevue Group is an independent Swiss financial boutique listed on the SIX Swiss Exchange. Established in 1993, the company and its approximately 100 professionals are largely active in the areas of asset management and wealth management. The Asset Management segment offers a select range of active equity strategies in fast-growing markets, the healthcare sector and in other special themes such as owner-managed companies, as well as successful holistic investment strategies across all traditional asset classes. Bank am Bellevue offers first-class wealth and investment advisory services with a special focus on entrepreneurial private clients. The Group's offering of investment-related solutions is rounded out by other services. These include the establishment, management and consultation of Investment Offices, trading and custody services, and selected credit facilities for affluent private clients as well as institutional clients.