Vontobel reports record inflow of new money and solid balance sheet

The Vontobel Group's net inflow of new money reached a record CHF 8.2 billion for the financial year 2011, corresponding to an impressive growth rate of 10.4%.

Assets under management from emerging growth markets – especially the Middle East and Asia – now amount to CHF 9.5 billion. At the end of 2011, the Vontobel Group held total client assets of CHF 131.6 billion (+3%).

Difficult financial markets and equity markets and the resulting low levels of client activity impacted performance. Net profit declined by 23% to CHF 113.8 million.

Undiminished capital strength: the Vontobel Group reported shareholders' equity of CHF 1.5 billion as of 31 December 2011. Its very solid capital position is also reflected by its continued above-average BIS tier 1 capital ratio of 23.3%.

While conditions in the first half of 2011 were shaped by the continuing recovery in the financial markets, the summer brought an escalation of the European debt crisis that dominated developments in the second half of the year. 2011 thus represented a continuation of the volatile conditions seen in previous years. Against this backdrop, the Vontobel Group's performance was characterized by strong growth in assets under management on the one hand and by the subdued development of earnings on the other. "The inflow of new money from emerging growth markets – especially the Middle East and Asia – demonstrates that our business strategy is proving effective. The strong inflows are also a reflection of the high quality of Vontobel's product offering and our proven advisory expertise. However, profitability and operating efficiency were below our expectations," stated Dr. Zeno Staub, CEO of the Vontobel Group, as he described the subdued overall performance in the year under review.

Record net inflow of new money – pleasing development in the emerging markets
A financial institution's ability to acquire client assets is a clear indication of the trust placed in it and is an expression of its advisory expertise and the quality of its products. In the financial year 2011, the Vontobel Group delivered an impressive performance in the area of asset gathering with a record net inflow of new money in the amount of CHF 8.2 bn, corresponding to an impressive growth rate of 10.4%. A large proportion of the inflows stemmed from Vontobel's defined focus markets of the US and the emerging markets – especially the Middle East and Asia, as well as Eastern Europe. This pleasing trend is clear evidence of the Vontobel Group's undiminished growth potential in the emerging markets and its ability to generate sustained added value through its integrated business model. At the end of 2011, the Vontobel Group held a total of CHF 131.6 bn of client assets.

Subdued performance affects Group-wide profitability
The economic environment in the financial year 2011 was impacted by an unprecedented strengthening of the Swiss franc – particularly in the second and third quarters – which was only halted by the bold intervention of the Swiss National Bank (SNB) in September 2011. At the same time, equity markets around the globe weakened – with the exception of the US market.

Furthermore, interest rates for countries with first-class credit ratings fell to record lows, while states with massive deficits had to pay much higher interest rates to raise capital. These different factors impacted the Vontobel Group's income statement, with operating income down 8% compared to the previous year. This decline was not fully offset by cost reductions; operating expense decreased by 6%. In addition, the tax rate rose to 22.5%. This resulted in a 23% reduction in net profit to CHF 113.8 mn and a return on equity of 7.5%, compared to 9.8% in the previous year.

Solid balance sheet guarantees flexibility and independence
The Vontobel Group maintained its very solid capital position with a BIS tier 1 capital ratio of 23.3%. This provides it with firm foundations to ensure its future competitiveness as an independent Swiss financial institution. Shareholders' equity was unchanged at CHF 1.5 bn. The creditworthiness of individual European states deteriorated increasingly in 2011. Thanks to its prudent risk management, the Vontobel Group has only limited positions in the bonds issued by these countries. Its credit risk exposures and issuer risk exposures to sovereign borrowers in peripheral Eurozone countries ('PIIGS' states) totalled CHF 164.2 mn after hedging at the end of 2011. The risk exposure to Greece accounted for only CHF 400,000 of this sum. The Vontobel Group has no exposure to Portugal.

The Board of Directors will propose the distribution of a dividend of CHF 1.10 per registered share – of which CHF 0.73 will take the form of a withholding tax-free repayment of share premiums and CHF 0.37 will comprise an ordinary dividend – to the General Meeting of Shareholders on 24 April 2012. "We are thus continuing to pursue our proven dividend policy of enabling shareholders to participate in the performance of the company while safeguarding the Vontobel Group's independence," explained Herbert J. Scheidt, Chairman of the Board of Directors.

Strong positioning is a source of opportunities
In the current challenging environment, a strong positioning, established brand and solid capital base represent key success factors. Vontobel's integrated business model is founded on its proven advisory, investment and risk management capabilities. They form the basis for the achievement of its ambitious mid-term targets, to which it remains committed.

Outlook
The transformation process that is underway in the Swiss finance industry will accelerate significantly in the coming months. The Vontobel Group expects volatile market conditions and investor uncertainty to persist. It will take steps to actively address these challenges – primarily by adapting its wealth and asset management business to the new industry reality. Here, it will focus in particular on its market presence and on costs.

The documents relating to the 2011 results (presentation, press release, Annual Report) are available electronically at: www.vontobel.com/ir

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