Consolidated annual report of VP Bank Group

Consolidated results

In what is still a challenging environment, VP Bank generated group net income of CHF 18.5 million. This represents a decline of 58.2 per cent compared to 2023. Following the significant decline due to a sharp drop in interest income, VP Bank published an interim statement in May 2024 and announced a package of measures to increase efficiency. During the second half of the year, restructuring costs and a one-off pension fund expense also acted as a drag on earnings.

Client assets

As of 31 December 2024, client assets under management amounted to CHF 50.7 billion, 9.5 per cent higher than at the end of 2023.

This growth was largely due to positive market trends in the first half of the year, although net new money growth was also a factor. New money inflows in 2023 just about compensated for forced outflows due to broad adjustments made to the client portfolio, which were initiated by the strategic withdrawal from business with Russian clients and the review of client documentation. Net new money improved in 2024 to CHF 0.5 billion, representing growth of 1.0 per cent. This was in spite of the fact that further forced outflows were recorded and the remaining portfolio with future forced outflows (exit portfolio) was reclassified from client assets to custody assets in November 2024. Excluding the forced outflows of CHF 0.7 billion and the reclassification of the exit portfolio of CHF 0.5 billion, net new money amounted to CHF 1.7 billion, representing growth of 3.6 per cent.

As of the end of 2024, custody assets amounted to CHF 5.6 billion, an increase of 20.0 per cent. Total client assets amounted to CHF 56.4 billion.

Income statement

Operating income

VP Bank generated operating income of CHF 330.5 million in 2024, which was 9.3 per cent lower than in 2023. The decline was mainly due to lower net interest income. Higher interest rates and the resulting shifts from current account balances to fixed interest deposits and securities increased interest expenses by 11.9 per cent, while at the same time, interest income fell by 3.1 per cent. Overall, net interest income was CHF 102.3 million, which was 23.5 per cent lower than in the previous year.

Net income from commission business and services amounted to CHF 137.1 million. Compared to the previous year, this represents a reduction of 0.6 per cent. Average margins were lower, as the scalable but lower-margin fund business grew faster than other segments.

Income from trading activities amounted to CHF 81.4 million, 4.6 per cent lower than in the previous year, which benefited from very good transaction-based income.

Income from financial investments made a positive contribution of CHF 5.1 million, as did other income, totalling CHF 4.8 million.

Operating expenses

Operating expenses fell by CHF 5.3 million to CHF 308.3 million, despite additional expenses for the measures designed to increase efficiency communicated in the summer of 2024. Restructuring costs amounted to CHF 7.3 million. Of this amount, CHF 5.0 million related to personnel costs, CHF 0.4 million to general and administrative expenses and CHF 1.9 million to depreciation and amortisation. In addition, one-off contributions to pension funds amounted to CHF 3.9 million due to changes in the pension fund regulations. Excluding these one-off expenses, operating expenses fell by CHF 16.5 million.

Personnel expenses rose to CHF 183.3 million due to restructuring costs of CHF 5.0 million and the additional one-off pension fund expense of CHF 3.9 million. Without these two one-off expenses, personnel expenses amounted to CHF 174.5 million and were thus slightly lower despite an inflation adjustment. This was helped by Group Executive Management waiving a bonus and by the generally lower variable compensation.

General and administrative expenses increased by 1.2 per cent to CHF 85.5 million or, without restructuring costs, to CHF 85.1 million.

Depreciation and amortisation expenses fell to CHF 37.0 million as planned. Without restructuring costs, depreciation and amortisation totalled CHF 35.1 million. Valuation adjustments, provisions and losses amounted to CHF 2.4 million.

Balance sheet

Total assets fell by 7.1 per cent compared to the previous year to CHF 10.6 billion.

Assets

As of the end of December 2024, current assets amounted to CHF 1.9 billion, of which CHF 0.9 billion were held as deposits at the Swiss National Bank (SNB). A further CHF 1.0 billion was attributable to receivables from banks or money market papers, both with terms of up to a year. Both items totalling CHF 1.9 billion covered 21.5 per cent of client deposits.

As of the end of December 2024, VP Bank had CHF 5.9 billion in outstanding loans to clients, of which the share of mortgage loans was CHF 3.7 billion. Credit volume increased by 8.7 per cent, with mortgage loans up 13.3 per cent and other loans by 1.7 per cent.

Liabilities

As of the end of 2024, client deposits stood at CHF 8.9 billion, thus decreasing by 5.9 per cent compared to the previous year. Among other things, this reflects the shift in current account balances to securities occasioned by the interest rate environment. In October 2024, VP Bank repaid a debt security issued amounting to CHF 100 million.

Equity capital and liquidity

VP Bank Group has a very strong capital base and good liquidity. As of 31 December 2024, the CET1/tier 1 ratio was 25.9 per cent, and the liquidity coverage ratio (LCR) was 165.3 per cent. The CET1 ratio is thus higher than the average for other banks, and the LCR exceeds the regulatory requirement of 100 per cent.

Sustainability statement

Information concerning non-financial matters can be found in the Sustainability statement 2024 of VP Bank Group.