Geneva-based Lombard-Odier's laser-like focus on advising and managing clients' assets has served it well over the years. That changed last year when the strategy turned against the private bank.
When our clients do well, we do well is the credo that proved to be Lombard Odier's Achilles' heel last year. Its assets under management fell by 12 percent to 192 billion francs ($208.2 billion) last year as a result of the stock market turbulence. Its net profit declined by ten percent to 243 million francs, according to annual results the banking group reported on Thursday.
The dependence on client assets, so characteristic of Swiss wealth and asset managers, is particularly high for Lombard Odier. Including those under custody, assets totaled around 300 billion Swiss francs at the end of December. It attracted net new assets of three billion francs, although it does not break down how much of this was attributable to asset management and private banking.
Dozens of New Jobs
The Group's reluctance to use the 18.2 billion francs on its balance sheet for lending did pay off in 2022. Lombard Odier it benefitted, albeit to a limited extent, from rising interest rates as central banks started raising interest rates.
In particular, the Swiss National Bank exiting negative interest rates helped numerous institutions as they no longer had to pay the SNB to park funds there. Operating income, which as a result relies heavily on the commission business, amounted to 1.380 billion francs, five percent below the previous year's figure.
Lombard Odier managed to keep costs stable despite investing in renewing its technology platform and in new hiring new personnel. The bank set a goal of recruiting 30 to 60 new advisors per year in private banking, with the overall headcount increasing by 64 to 2,718 positions last year. As part of a five-year plan, the group is investing in a range of sustainable and private market investments, technology, and organic growth.
New Senior Managing Partner
The partner-managed, 225-year-old company is hewing to its strategy under the chairmanship of Hubert Keller who at the beginning of the year replaced Patrick Odier as senior managing partner. Keller now expects increased volatility in the financial markets in the coming months.
Given the restrictive monetary policy conditions, the still high inflation, and the risk of a mild recession in the industrialized countries, it may still be too early for a sustained recovery of risk assets, Lombard Odier warned on Thursday.
