Income statement

In the 2018 business year, operating income increased by 0.1 per cent to CHF 399.7 million (2017: CHF 399.4 million). The contribution to operating income made by the acquired companies LB(Swiss) Investment AG and Semper Constantia Privatbank AG totalled CHF 32.4 million.

Interest income before expected credit loss increased in comparison with the previous year by 8.3 per cent or CHF 12.1 million to CHF 158.0 million (2017: CHF 145.9 million). Income from interest business with clients slipped marginally. The growth of the mortgage lending volume was unable to completely compensate for the expected decline in income from the extension of fixed interest loans at lower conditions and the higher interest paid on foreign currency funds. In contrast, income from interest business with banks was substantially above the previous year thanks to lower interest rate hedging costs and higher interest earnings on bank deposits in foreign currencies.

In the 2018 business year, the LLB Group was able to credit the income statement with an amount of net CHF 7.1 million (2017: release of CHF 8.3 million) for the release of allowances for expected credit loss.

Net fee and commission income increased by 13.2 per cent or CHF 20.5 million to CHF 175.3 million (2017: CHF 154.8 million). The rise was attributable to intensive marketing measures, for example with the launch of new LLB Invest products. The contribution to income of the acquired companies amounted to CHF 28.3 million. Net brokerage fell in comparison with the previous year by 15.1 per cent on account of the lower volume of stock market transactions made by clients.

Net trading income in the 2018 business year stood at CHF 73.8 million (2017: CHF 82.9 million). Trading in foreign exchange, foreign notes and precious metals rose substantially in comparison with the previous year by 5.0 per cent to CHF 64.4 million. This was attributable to the treasury performance and the contribution made to the business result by the acquisitions. The valuation of interest rate hedging instruments, from the perspective of the reporting date, amounted to CHF 9.4 million (2017: CHF 21.5 million). The decline is due to the development of market interest rates in Swiss francs, which rose in 2017 and remained stable in 2018.

The negative development on the financial markets and higher USD interest rates led to book losses with financial investments of CHF 9.9 million compared with a gain of CHF 4.2 million in 2017; the financial instruments were measured at fair value from the perspective of the reporting date. Income from dividends remained unchanged relative to the previous year.

Other income remained at the same level and amounted to CHF 4.9 million.

Operating income (in CHF millions)

Operating expenses climbed in the 2018 business year by 14.6 per cent to CHF 305.9 million (2017: CHF 267.0 million). The operating expenses of the acquired companies without integration costs totalled CHF 29.3 million. The one-time integration costs amounted to CHF 14.8 million.

Personnel expenses of CHF 182.4 million were up compared with the previous year by 17.4 per cent or CHF 27.0 million (2017: CHF 155.4 million). The increase was attributable to the strategic expansion of human resources as well as the company acquisitions.

General and administrative expenses expanded by 9.6 per cent or CHF 8.0 million to CHF 90.8 million (2017: CHF 82.8 million). The previous year’s figures contained the release of provisions for legal and litigation risks as well as for higher lawyers’ and legal representation expenses of net CHF 14.9 million. Without these effects, general and administrative expenses would have been CHF 22.7 million higher than the previous year, which was largely due to the takeover of the acquired companies and the integration costs incurred in relation to this.

Depreciation and amortisation increased to CHF 32.7 million (2017: CHF 28.8 million). The increase was largely due to the takeover of the acquired companies.

The Cost-Income-Ratio rose to 77.7 per cent (2017: 69.6 %). Without market effects, i.e. without income from interest rate swaps and price gains from financial investments, the Cost-Income-Ratio would have been 75.5 per cent (2017: 73.9 %).