Vontobel 1H Net Shrinks; Cost Cuts Can't Offset Rev Slide
Vontobel Holding AG said Wednesday first-half net profit shrank by nearly half because the bank couldn't cut costs as quickly as fees from wealthy clients fell.
The Zurich-based bank's net profit for the six months was 63 million Swiss francs ($58.3 million), down from CHF114.7 million in the year-ago period. Vontobel beat analyst expectations for the profit, which averaged CHF53.3 million.
It said that, while financial markets are set to remain volatile in coming months, it sees the first signs of recovery.
"Investment banking is now back on track thanks to the stabilization of the markets and the normalization of the bond market," the bank said in a statement.
In the first half, revenue slid 24% to CHF355.6 million on the year, mainly because fees and commissions dropped sharply.
Because Vontobel cut costs by 13% to CHF285.1 million, the slide in profits was softened somewhat, but cost-cutting couldn't make up the drop in income entirely.
Vontobel picked up CHF800 million in fresh assets during the period, a reading which was slowed by client uncertainty, the firm said. CHF600 million of the total was from wealthy private clients.
The bank said its recent aquisition of Commerzbank AG's (CBK.XE) Swiss arm will bolster assets and income at its private bank, which is dwarfed by its investment-banking arm.
Vontobel shares have gained 57% so far this year, beating a 43% rise in the Stoxx Europe 600 bank index. Tuesday, the stock closed at CHF34.55, giving the bank a market capitalization of $2.14 billion. Trading in Zurich resumes at 0700 GMT.
Company Web Site: http://www.vontobel.com
-By Katharina Bart, Dow Jones Newswires; +41 43 443 8043; katharina.bart@dowjones.com
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