Verwaltungs und Privat Bank : 2013 annual results of VP Bank Group: consolidated net income of CHF 38.7 million; gratifying net new money inflow of close to CHF 1.0 billion

• Consolidated net income: CHF 38.7 million

• Total client assets as at 31.12.2013: CHF 39.6 billion

• Net new money inflow: CHF 965 million

• Cost/income ratio: 70.2 per cent

• Tier 1 ratio: 20.4 per cent

For the 2013 financial year, VP Bank Group recorded consolidated net income of CHF 38.7 million. Compared to the previous year, net operating income increased by 1.8 per cent from CHF 235.2 million to CHF 239.4 million. Total interest income rose by CHF 3.4 million versus the previous year to CHF 86.9 million. Total income from commission businesses and services for the year increased by 5.6 per cent to CHF 114.1 million as a result of the improved sentiment in the financial markets, while income from trading activities fell from CHF 21.1 million to CHF 19.5 million. In 2013, income from financial instruments totalled CHF 16.3 million (previous year: CHF 19.5 million).

Adjusted for one-time effects attributable to the change of the pension fund from a defined benefit to a defined contribution scheme in 2012, as well as early adoption of the revised IAS 19 standard, operating expenses witnessed a year-on-year decline of 1.5 per cent to CHF 168.0 million. General and administrative expenses were also reduced by 1.5 per cent to CHF 46.0 million. Personnel expenses in 2013 amounted to CHF 122.0 million, yet another 1.5 per cent drop versus the previous year. Depreciation and amortisation totalling CHF 27.0 million was 8.2 per cent lower than the prior-year level. Valuation allowances, provisions and losses declined by a total of CHF 0.9 million. Included in that figure are provisions of CHF 3.0 million taken for VP Bank (Switzerland) Ltd. in connection with its participation in the US programme for resolving the tax dispute between Swiss banks and the United States.

The cost/income ratio increased in 2013 to 70.2 per cent (previous year: 62.8 per cent). However, the figure for 2012 must be viewed in light of the one-time effects: adjusted for those effects, the 2013 reading is 2.3 per cent below that of the previous year. With a tier 1 ratio of 20.4 per cent (previous year: 21.5 per cent), VP Bank Group has a very solid equity capital base compared to its peers. The Bank's medium-term target of at least 16 per cent, which is far above the current legally prescribed minimum of 8 per cent, was clearly exceeded yet again in the past financial year. Total assets rose by 5.3 per cent to CHF 11.2 billion.

Client assets under management at VP Bank Group amounted to CHF 30.6 billion at the end of 2013, compared to the prior-year figure of CHF 28.5 billion, which represents a 7.4 per cent increase. Included in that total is a performance-related gain of CHF 1.1 billion as a result of positive financial market developments.

For the past financial year, VP Bank Group recorded a net new money inflow of CHF 965 million, a 3.4 per cent increase. The acquisition of the private banking activities of HSBC Trinkaus & Burkhardt in Luxembourg resulted in an inflow of client assets totalling CHF 2.0 billion. Successful market cultivation efforts made it possible to counter the net outflow from the existing business.

Assets held in custody increased to CHF 9.0 billion (previous year: CHF 8.8 billion). Consequently, total client assets stood at CHF 39.6 billion on 31 December 2013 (previous year: CHF 37.3 billion).

"2013 was a year of important change at VP Bank Group. It brought significant staffing adjustments and organisational redirection, strategic moves that have resulted in a sharper focus of VP Bank Group on the current market requirements and client needs," sums up Fredy Vogt, Chairman of the Board of Directors. Several examples: the newly created "Client Business" organisational unit and the asset deal with HSBC Trinkaus & Burkhardt, as well as the divestment of the Group's fiduciary businesses and the leaner composition of the Executive Board at the parent bank in Vaduz, which has been in the form of a personnel union with Group Executive Management since 1 January 2014.

Nothing has changed in terms of VP Bank's medium-term goals - an annual 5 per cent increase in net new money based on client assets under management, a cost/income ratio reduction to an average of 65 per cent and maintaining a core capital (tier 1) ratio of at least 16 per cent.

The Board of Directors will propose to shareholders at the annual general meeting on 25 April 2014 that a dividend of CHF 3.50 per bearer share and CHF 0.35 per registered share be paid (previous year: CHF 2.50 per bearer share and CHF 0.25 per registered share). The proposed dividend is based on the revised dividend policy as adopted by the Board of Directors: going forward, between 40 and 60 per cent of VP Bank Group's consolidated net income is to be distributed to shareholders, provided the Bank's medium-term tier 1 ratio goal of 16 per cent is exceeded. The aim is to cultivate a consistent dividend trend.

Walo Frischknecht is stepping down from the Board of Directors after 12 years of service. VP Bank thanks Walo Frischknecht for his devoted collaboration, in particular as chairman of the Audit & Risk Management Committee. The Board of Directors will propose to shareholders at the annual general meeting on 25 April 2014 that Dr Beat Graf and Michael Riesen be elected as new Board members.

An additional proposal envisions an official name change from "Verwaltungs- und Privat-Bank Aktiengesellschaft" to "VP Bank AG" (or as applicable, "VP Bank SA", "VP Bank Ltd").

The primary strategic goal of VP Bank is to grow profitably as a Group and thereby preserve the Bank's independence. VP Bank Group has a very solid equity capital base, which even after the introduction of Basel III will stand for a high degree of stability and security in comparison to its peers. That substantial amount of capital will enable the Group to invest in growth. Thus VP Bank will take advantage of attractive market opportunities as they arise, provided they are a suitable fit from a strategic and cultural standpoint.

At the beginning of 2014, a new, leaner organisational structure took effect at VP Bank Group. With this streamlined management structure, the processes and competencies are simplified and the reaction times shortened. Redundancies can be reduced and client focus intensified through greater Group-wide collaboration and the bundling of skills.

The transformation process relating to the areas of tax transparency and the automatic exchange of tax-related information are developments which will continue to occupy VP Bank in the years ahead. The heavy regulatory pressure on the financial services industry persists, and the capital market environment remains challenging. "VP Bank Group is well equipped to contend with the intense competition and is responding to the new requirements with specific measures," concludes Alfred W. Moeckli, Chief Executive Officer.