Vontobel is struggling overall after a mixed first half, which comes at an inopportune time. The CEO, who is stepping down next year, is increasingly preoccupied with other issues.
Zeno Staub probably envisioned his long-planned departure as Vontobel CEO somewhat differently. As previously reported, he will hand over the reins in April 2024, although it remains unclear who will succeed him.
What is certain, is that it would be advantageous if he were able to leave the Zurich-based investment house in a commercially successful condition, which doesn't look like the case, as the figures published by Vontobel on Thursday show. Profits fell to 127.4 million francs in the first half of 2023, down 16 percent from the same period last year.
Asset Management Under Pressure
For the third consecutive six-month period, Vontobel reported a net decline in net new money. That's sobering considering peers such as Julius Baer, Union Bancaire Privée, and most recently, EFG International reported better results. Admittedly, the problem at Vontobel doesn't lie primarily in Wealth Management, traditional asset management for private individuals, but in the Asset Management business with institutional investors such as insurance companies and pension funds.
Net new money declined by almost 6 percent in the unit, which manifested itself in a marginal increase of 1 percent in the growth of assets under management.
Major Uncertainties
For a company no longer wanting to be called a bank, but rather an investment house, it's a disappointing result. Institutional clients are holding back due to macroeconomic uncertainty, Staub said in an analyst call Thursday morning. However, it's also conceivable clients aren't completely convinced by the performance of Vontobel products.
Viewed in a larger context, Vontobel has been limping along since the reorganization announced at the end of 2019, which subsequently entailed numerous changes, particularly in personnel. At the time, Asset Management was run as an independent division and was highly successful before it was restructured. Staub personally took over the top management of the business from Axel Schwarzer at the end of 2020, before being placed under the head of investment, Christel Rendu de Lint. To be sure, she's had little time to bring it on track for sustainable success.
High-Cost Areas
The latest half-year results were also burdened by very high costs, including accounting adjustments (IRFS), integration of wealth manager SFA, abandoning of markets in Russia and Hong Kong, and the strong Swiss franc. An aggressive personnel offensive, which many other banks have also pursued in recent months following the crisis at Credit Suisse, also cost money.
All this was reflected in a significantly higher cost/income ratio of 78.2 percent, 5.4 basis points higher than a year ago and well above the medium-term target of under 72 percent.
Patience With new Client Advisors
Vontobel is still looking for more client advisors, but it remains to be seen by when, if ever, this push will manifest itself positively. Many of the new people have either not yet started or are still in negotiations, as Staub explained. The fact remains that most customers, especially from Credit Suisse, have not yet moved their money. Instead, they are still waiting, as other private banks confirmed.
As his working days at Vontobel wind down, Staub is taking a high risk which his successor will have to shoulder. This impression is reinforced by the fact that Vontobel believes that times remain uncertain.
Reality or Expedient Optimism?
It is also uncertain whether Staub will be elected to the National Council in the fall as a representative of the «Die Mitte» centrist party, as he pursues a post-banking political career. In the course of his election campaign, a prosperous Vontobel would certainly benefit him.
By then, it should become clear whether his statement that «irrespective of the current environment, we remain confident that we will achieve our current ambitious 2024 mid-term targets across the cycle» will become reality or reveal itself to have been mere optimism.
