Holding our course
Results to 31 December 2011
2011 featured a tough economic and stockmarket environment. It also brought continuing pressure on banking secrecy and heavier regulation of wealth management that drove up operating costs.
The weakness of the dollar and euro against the Swiss franc weighed heavily on our revenues, the bulk of which are denominated in the former currencies whereas our overheads are mainly in francs.
Large inflow of fresh money
Thanks to a prudent investment policy and the dynamic business performance of our wealth management departments, we were able to counter these harsh economic and political conditions by continuing to expand and winning new clients. Our net inflow of fresh funds exceeded CHF 3.2 billion.
Despite this good showing, the adverse impact of the markets and dollar and euro weakness in relation to the Swiss franc left assets under management slightly lower. These stood at CHF 91.4 billion at end-2011 as against CHF 92.7 billion the previous year.
Net profit
The large inflow of new client funds helped to counterbalance the effects of the upheavals in our industry’s operating conditions and the effects of exchange rates. We were able to achieve a consolidated gross profit of CHF 207.7 million, down 7.2% on the 2010 figure (CHF 223.7 million).
Group net profit came to CHF 125.1 million, marking a drop of 16.6% compared with CHF 149.9 million in 2010.
Continuing business development
Aided by our situation as a family-controlled wealth management company with a stable shareholder base, we are able to rise to the challenges ahead while further striving for excellence and adapting our organisational structure to the ongoing changes in our industry. Now more than ever before our strategic growth projects are tightly geared towards these objectives.
Our Group has expanded into the Gulf region via a representative office in Dubai, for which we have just received the operating licence.
On the face of it, opening a branch in Hong Kong will mark a decisive step in our development as Asia is the region where wealth creation is strongest. We received all the necessary licences in February 2012 and our Hong Kong unit is now fully operational.
Plans to grow our onshore clientele in Switzerland are coming to fruition. New professionals have been added to the management desks assigned to this market, and our building in Rue Petitot has been completely renovated for the purpose. We have also purchased two buildings from the Swiss National Bank; one is already occupied by our Bank while the second one will contribute to our expansion.
Investment funds
The first subfund of our real estate fund called Edmond de Rothschild Real Estate SICAV - Swiss invests directly in residential and commercial property in Switzerland. FINMA authorised the increase of this subfund's capital by CHF 100 million which ended successfully on March 23 and also gave us the approval for the creation of a second compartment called Edmond de Rothschild Real Estate SICAV Helvetia; the subscription period will be from April 16 to 25. This vehicle is an excellent illustration of our Group's expertise.
The quality of our alternative asset management was rewarded throughout 2011 in the form of numerous recognitions for our funds of hedge funds line. In particular, we were named Best overall Group at the European Fund of Hedge Funds Awards 2011 presented by Hedge Funds Review, London; we received the Excellence in Investment Management prize at the International Alternative Investment Review Awards 2011 in Milan; we were named Group of the Year 2010 at the InvestHedge Awards in March 2011 in New York; and Edmond de Rothschild Prifund Alpha Traders was picked as Best Global Macro Fund.
Capital ratio
The Banque Privée Edmond de Rothschild Group can continue to claim an extremely healthy, liquid balance sheet featuring very little leverage, conservative risk management and solid financial foundations, as illustrated by our BIS Tier 1 ratio of 29.2%.