Rothschild said it is optimistic about its prospects despite a massive slide in full-year profits. Why?

At first glance, Zurich-based Rothschild Bank has suffered a massive slide on the year ending March 31, according to the results which finews.ch has seen. Profit slid nearly 70 percent on the year, to 12.9 million Swiss francs from 37.9 million francs.

It would nevertheless be wrong to raise alarm. The slide is due to the one-time effect of a property sale in Seefeld which had inflated 2014/2015's result. Without this effect, Rothschild's operating result was actually 2 percent higher.

Billions in Net New Money

This was also due to an above-average net new money growth of 1.4 billion francs, according to the results. By contrast, Rothschild won just 183 million in the prior period. The bank's assets now total 25.9 billion francs, from 24.4 billion 12 months ago.

The most recent results illustrates Rothschild's varied fortunes, including a loss – the first in its history – in the 2013/2014 year.

Goodbye to Clients

The loss was the result of a tepid market environment and a structural shift in Swiss private banking away from banking secrecy, which didn't leave Rothschild unscathed. As a consequence, Rothschild expunged numerous clients from its books and reduced its core markets significantly.

The most recent result vindicates the bank's strategic decisions. The groundwork was laid by previous Chief Executive Veit de Maddalena, who handed over the role to Laurent Gagnebin in June.

Changes in Top Management

The CEO change appears to have been the result of two years of succession planning and thus doesn't represent a break with previous management. De Maddalena remains at Rothschild as Executive Vice Chairman and is devoting himself to several large client mandates and projects.

In contrast to other Swiss banks, Rothschild kept its headcount largely stable in the last 12 months at 450 full-time equivalents, 350 of them in Switzerland. Its main revenue generators continue to be commission income, while its trading result plays a far smaller role.

Two executives, Juan Carlos Mejia Perez and Matthew Le Floq, have been promoted to Rothschild's top management as head of investments Switzerland and operating chief for Rothschild Trust, respectively.

More to follow