Lombard Odier remained steady during the first half in the face of a financial storm. Senior partner Patrick Odier tells finews.asia what he expects in the second half.
Like its rivals, Geneva-based private bank Lombard Odier has not been able to escape turbulent financial markets. Against the backdrop of central banks tightening monetary policy, the bear market on the stock exchanges, and the war in Ukraine, the institution reported a decline in its assets under management (AUM) in the first half of the year.
At the end of June, AUM stood at 310 billion Swiss francs ($322 billion) compared to the 358 billion francs at the end of 2021, representing a 13 percent decline. The bulk of the decline, 42 billion francs, was attributed to market performance and foreign exchange fluctuations, with 7 billion the result of net outflows, according to the bank.
Solid and Debt-Free
However, the bank's profitability was hardly affected by this, with consolidated net profit reaching 136 million Swiss francs, a decline of 5 percent compared with the record-breaking first half of 2021. With a core capital ratio (CET1) of 29.5 percent, the firm is more than solidly positioned and, according to its statements, debt-free.
Despite this starting position, Senior partner Patrick Odier told finews.asi that the bank is facing challenges in a market environment not seen in the last ten years. This is making Odier and the other partners of the Geneva-based pure play highly cautious for the second half of the year.
«This will probably be a little more difficult than the first half,» the 67-year-old senior partner says and speaks of a tough year that the bank and its clients will have to endure.
New Money Flowing
Lombard Odier benefits from the fact that 69 percent of client assets in private banking are now entrusted to it in discretionary or advisory mandates. Should clients take refuge on the sidelines given the stock market situation, this is less of an issue when compared to its rivals in Switzerland, such as UBS and Credit Suisse. While Odier does not see any major change in sentiment among the wealthy clientele, he says the priority now is to defend the assets against the stock market turbulence.
Although Lombard Odier does not give figures on new money, it says it is within a targeted range of 3 to 5 percent growth in the past half year, corresponding to an inflow of 5 to 6 billion francs in private banking.
Hubert Keller
That the group reported an outflow of 7 billion francs has its reasons in Bern, where regional bank Valiant withdrew custody assets from Lombard Odier as a result of a strategic realignment, Odier said. Still, the bank's partnership with Valiant, which has existed for years, will continue.
However, Odier's time as «primus inter pares» among the shareholders of the bank is coming to an end. As of January 1, Hubert Keller will take the helm in his place. For the remainder of 2022, the duo will still lead Lombard Odier side by side before Keller becomes the sole helmsman.
«He is ready for the office,» he says of Keller.
For Odier, his last six months at the helm of the 226-year-old bank have now begun.
