Vontobel's Record Profit Growth and Strategic Advancements in 2024

Vontobel Holding AG (XSWX:VONN), a leading Swiss private bank and asset manager, reported a strong set of results for the full-year 2024, marking a significant turnaround from the previous year. The company's net new money inflows rebounded to CHF 2.6 billion, a notable improvement from the negative figure in 2023. This positive trend was driven by a return to growth in both private and institutional client segments, as well as a 24% year-on-year increase in net profit to CHF 266 million.



Vontobel's strategic focus on private markets and high net worth clients has significantly contributed to its long-term growth prospects. The company made significant progress in this area by completing two acquisitions that align with this strategy. These acquisitions have helped Vontobel strengthen its position with high net worth clients and enter private markets, which are expected to be a key driver of growth in the future. Additionally, the company's strong investment teams are well-positioned to capture flows in fixed income, asset-backed securities, and emerging market fixed income, further supporting its growth prospects.

Vontobel's cost-to-income ratio has improved to below 75%, which is a significant achievement for the company. This improvement can be attributed to several key factors, including the successful execution of an efficiency program, strategic acquisitions, and a return to positive net new money growth. The company has successfully reduced annual costs by 100 million Swiss francs, achieving exit rate savings of CHF 45 million. These cost-saving measures, combined with the strategic acquisitions and increased revenue streams, have helped to improve the cost-to-income ratio.

However, Vontobel faced foreign exchange effects that resulted in a profit reduction of CHF 40 million due to a stronger CHF against the US dollar. Additionally, institutional clients experienced outflows, particularly in emerging market strategies, which continue to face challenges. The tax rate increased due to global minimum tax regulations and reduced participation exemptions, impacting profitability. Interest income decreased by 36% due to reductions in Swiss interest rates and shifts in deposit mix, further impacting overall revenue.

Despite these challenges, Vontobel remains optimistic about its future prospects. The company plans to mitigate the impact of Basel 3 final measures on its CT1 ratio by adjusting product design and balance sheet holdings. These adjustments were made early to align with Basel 3 final requirements, despite short-term disadvantages. Vontobel is also well-positioned to capture flows in fixed income and emerging markets with its strong investment teams, despite the ongoing challenges in these areas.

In conclusion, Vontobel's record profit growth and strategic advancements in 2024 demonstrate the company's resilience and commitment to long-term growth. Despite facing foreign exchange effects and challenges in emerging markets, Vontobel has successfully improved its cost-to-income ratio and remains well-positioned to capture flows in key areas. As the company continues to execute its strategic focus on private markets and high net worth clients, investors can expect Vontobel to maintain its strong performance in the coming years.