In 2023, high provisions and allowance adjustments culminated in a drop in profits for Liechtenstein’s royal family-owned bank. On the other hand, there are many growth initiatives that are intended to boost the bank’s performance this year.
In last year’s accounts, Liechtenstein-based LGT recorded its first drop in profits for a very long time. The last time was in the aftermath of the financial crisis of 2008.
As a result of new growth initiatives and various writedowns and provisions, the 2023 result dropped by 11 percent, or 375.3 million Swiss francs ($427 million), the bank announced on Monday. By contrast, the total operating income increased by 11 percent to 2.57 billion francs from the previous year.
The new asset inflows in 2023 amounted to a net 21.9 billion francs, corresponding to an increase of 8 percent (2022: 6 percent). All market regions contributed to the growth, in both private banking and asset management segments, as was further learned. The net new assets item also includes an inflow of around 7 billion francs from a large pension scheme client of LGT Capital Partners.
More Staff – Higher Salaries
Personnel costs were expensive – this increased by 12 percent to 1.48 billion francs and is the result of organic personnel growth and the various acquisitions over recent years, as well as the higher demarcations for long-term performance-based renumeration components, the bank presented. Material expenditure increased by 17 percent to 427.8 million francs, and this figure includes higher expenses for digitization initiatives, and project and consulting costs.
Depreciation, amortization and provisions increased by 46 percent to 201.8 million francs. This was due to the value adjustment on a participation in Germany, as well as individual potential legal disputes with clients. The cost-income ratio (CIR) also increased accordingly – by 1.3 percentage points to 74.2 percent compared to the previous year’s value.
British Acquisition Included
By the end of 2023, the assets under management increased by 10 percent to 316.0 billion francs, compared with 287.2 billion francs by the end of 2022. As well as organic growth, the acquisition of the wealth management business of U.K. asset manager «abrdn» contributed 6.4 billion to the result. The positive market performance was offset by slightly higher negative foreign currency effects.
«Our results for 2023 are further evidence that LGT has developed a strong competitive position in the international market. We are confident this will position us well for further growth,» said Prince Max of Liechtenstein, Chairman of the LGT Banking Group.
At the end of 2023, LGT employed a total of 5,638 persons (15 percent increase compared to the previous year) at more than 30 locations in Europe, Asia, America, Australia, and the Middle East.
Planned Expansion in Germany
The international presence developed in recent years has opened up additional opportunities for growth, the royal-owned bank went on to say. The recent expansion of private banking in the Asia-Pacific region, namely to Australia, India, Thailand and Japan, is already delivering pleasing results.
The bank’s entry into the private banking market in autumn 2022 is also developing very positively: After opening a first location in Hamburg, LGT Private Banking is also now present in Cologne, Duesseldorf, and Frankfurt, and there are plans to further expand its presence this year.
More Than 100 Billion Dollars
The group company specializing in alternative investments, LGT Capital Partners, was also able to utilize its market position last year to achieve further growth.
The company now supports more than 700 institutional clients at 15 locations worldwide, and reached 100 billion dollars in assets under management for the first time in 2023.
Innovation Center in Barcelona
LGT also announced that it plans on further developing its client platform. With the opening of the «LGT Incubator and Accelerator Centre» in Barcelona in the spring of 2023, it now has an innovation hub that will drive forward the development of modern digital services and products.
The main focus here is on applications to increase the efficiency and quality of digital banking services. LGT is also currently making significant investments in building its resources in artificial intelligence.
