Vontobel: Fresh Money Flow Stagnates

Vontobel, results, Rajiv Jain

Zurich-based bank Vontobel continued its growth path in the first six months. Investment banking showed signs of weakness, as well as the bank's ability to attract fresh funds from clients.

Vontobel's asset management unit was the bank's main profit generator once again, with a pretax profit of 85.3 million Swiss francs – a rise of 26 percent on the year, it said in a statement.

Profit from private banking rose 4 percent to 26.6 million francs. Vontobel suffered a setback in investment banking, where profits dropped 19 percent to 37.6 million francs.

The bank recorded an 8 percent rise in net profit to 106 million francs.

Stagnant New Money

The results beat market expectations. Analysts had predicted a net result of just 84.4 million francs, in a poll conducted by newswire «AWP».

Assets under management without funds that Vontobel holds in custody fell five percent to 140.1 billion francs.

The bank's net new money dropped t0 3.1 billion francs, less than half the 6.4 billion in the same period of 2015. Net new money was «dented» by the departure of Rajiv Jain, a renowned emerging markets fund manager who left Vontobel in March to set up his own boutique.

Spending in Check

Market expectations called for a net outflows of 1.7 billion francs and assets under management at 132 billion.

Vontobel's cost-income ratio improved on the year to 72.9 percent, from 75.7 percent. The bank beat its 2017 target of less than 75 percent.

The bank improved its core capital ratio by 40 basis points to 18.3 percent.

Difficult Conditions

The bank was downbeat in its outlook, saying it expects «markets to remain highly volatile, interest rates to remain low and the uncertain political environment to persist.»

The bank cautioned that this will impact both its focus market as well as its business in Switzerland. It also warned that it will be difficult to generate income for clients.

«We will continue to systematically pursue our growth and profit targets even though we have to assume that operating conditions for our business will not improve in the second half of the year,» Vontobel CEO Zeno Staub said in today's statement.

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