VP Bank had a lower profit in the first half of 2020 than a year earlier, mainly due to a one-off valuation adjustment. Operating income was up, and net new money also increased.
Net income at Liechtenstein-based VP Bank plunged to 14.4 million Swiss francs ($15.9 million) in the first half of 2020, down from 35.3 million in the same period of 2019, according to a statement by the private bank on Tuesday. The reason for the decline is a one-off valuation adjustment that had already been communicated and referred to a single position loss of about 20 million francs during the corona-crash in March.
Following the adjustment, the bank had decided to part ways with finance chief Siegbert Naescher and risk head Monika Vicandi.
Negative Market Performance
The adjustment is the one negative aspect in an otherwise solid half-year report. Operating income increased by 2.5 percent to 166.8 million francs. VP Bank attracted 1 billion francs in net new money, while assets under management dropped some 4 percent to 45.6 billion francs due to the negative market performance.
The bank had its costs under control and achieved a cost-income ratio of 66.1 percent, compared with 68.6 percent a year earlier. That's below the target ratio of 70 percent. The core capital ratio amounted to an unchanged 20.1 percent.
Profit Target Postponed
VP Bank maintained its targets despite the challenges that followed the pandemic. However, given the difficult conditions, it postponed the net income target of 100 million francs until the end of 2026. One of the company's main strategic pillars is the rapidly advancing digitization of the services.
«We have worked efficiently and generated great operating results in an extraordinary market environment,» said CEO Paul Arni. «The one-off valuation adjustment is very unfortunate, but we managed to react to the challenging situation quickly and effectively and have successfully launched important preparatory work for our new strategy cycle.»
