The Swiss investment company reported an outstanding volume of CHF9.6 billion for structured products.
Vontobel posted a profit before tax of CHF262.7m (US$298m) in 2023, down two percent year-on-year (YoY).
In 2023, Vontobel achieved a solid set of results against a mixed market backdrop, which caused clients to remain on the sidelines - Christel Rendu de Lint, co-CEO
In a challenging market environment, particularly for active asset managers, demand for structured investment solutions decreased further in 2023, the company stated.
Advised client assets, which include structured products, reached CHF231.9 billion – up 2.3% YoY. As of end-December 2023, the outstanding volume of structured products and debt instruments issued was CHF9.6 billion (end-2022: CHF7.7 billion).
Vontobel issued over 45,000 publicly offered structured products in 2023, up 47% YoY, according to SRP data. Of these, some 42,356 products were targeted at investors in Switzerland where the outstanding volume at the end of 2023 stood at CHF7 billion (2022: CHF5.5 billion).
The Swiss products were mostly (barrier) reverse convertibles, with more than 50% of all issued products linked to a worst-of basket and a further 29% linked to a single share. Another asset class in demand was FX (9.5%), and there was also some appetite for products linked to a basket of indices (2.8%), credit-linked certificates (2.1%), and ETFs (1.1%).
Roche (2,023 products), Tesla (1,910) and Nestle (1,714) were the preferred shares of the Swiss investor while the S&P 500 (1,220), Eurostoxx 50 (1,192) and the local Swiss Market Index (974) were the most used equity indices. Other popular underlyings included EUR/USD (513), USD/CHF (360), SPDR S&P 500 ETF Trust (281), and Invesco QQQ ETF (227).
In Germany (outstanding volume end-2023: CHF2.2 billion, equal to the previous year), the company issued 2,269 products during the year – again almost exclusively (barrier) reverse convertibles (2022: 2,142 products. The Eurostoxx 50 was the most featured underlying (218 products), followed by the shares of Mercedes Benz (77), Volkswagen (70), and Siemens (73).
The third biggest market for Vontobel was Italy where it sold 455 products – mostly autocalls linked to equity baskets (2022: 128).
Alongside other focus markets the UK and the US, the company also wants to expand its activities in the Asia Pacific region – primarily Japan and Australia – as well as selected countries in Latin America.
Operating income
In 2023, Vontobel generated operating income of CHF1.3 billion – up two percent YoY. Some 60% of the operating income was generated from the commission business (2022: 65%). Net interest income and dividend income accounted for 14% of operating income (2022: eight percent), and trading income contributed 26%, in line with the previous year.
Net fee and commission income declined by six percent to CHF787.3m, primarily due to the reduction in assets under management of an average of five percent, which led to lower advisory and management fees of CHF781.6m (2022: CHF868.3m), while administration and custody fees, at CHF196.3m, were down six percent. Brokerage fees decreased to CHF71.4 million, down 11% YoY.
The cautious behaviour of investors over long periods of the year was also reflected by trading income of CHF338.1m, similar to the previous year (2022: CHF338.4m). Trading income mainly comprises income from the issuing, hedging and market making of structured products and warrants – activities which contributed CHF274.2m (down nine percent versus 2022) to trading income in the reporting year.
Income from FX and precious metals trading, however, increased by 66% to CHF64m.
As of 31 December 2023, Vontobel held 8,852 treasury shares to hedge options and structured products (2022: 6,388).
Assets under management
The market recovery seen primarily in the final quarter of 2023 also impacted the volume of assets under management (AuM), which, at CHF206.8 billion, was one percent above the figure for end-2022.
In the business with wealth management clients, AuM increased by five percent to CHF97.4 billion due primarily to the good inflow of net new money. In asset management, the improvement in market sentiment was unable to compensate for negative net new money and AuM decreased by four percent to CHF103.3 billion during the reporting year.
AuM consist of 50% institutional assets held in the asset management business and 47% private client assets held in the wealth management and digital investing client units.
Fifty-three percent of AuM originate from outside Vontobel’s Swiss home market – primarily from the target markets of Germany, the UK, Italy and North America, as well as the Asia Pacific region, Latin America, and the Middle East and Africa. Clients domiciled in Switzerland account for CHF96.2 billion of AuM.
‘In 2023, Vontobel achieved a solid set of results against a mixed market backdrop, which caused clients to remain on the sidelines,’ Christel Rendu de Lint, co-CEO said.
Co-CEO Georg Schubiger added: ‘Throughout the year, we remained close to our clients, guiding them with advice and execution amidst market uncertainties.’
Rendu de Lint and Schubiger (pictured) took over the management of Vontobel on 1 January 2024, replacing Zeno Staub, who after 22 at the company, including 20 years as a member of the executive committee and 12 years as CEO, informed the board of directors in spring 2023 of his wish to step down from his role, to become more actively involved in Swiss civil society.
In addition to performing their duties as co-CEOs, Rendu de Lint and Schubiger will continue to serve as head investments and head wealth management, respectively.
The leadership of technology & services also changed, with Markus Pfister, head structured solutions & treasury (SS&T) and a member of the executive committee of Bank Vontobel since 2020, succeeding Felix Lenhard as COO and head technology & services, effective 1 January.
Click the link to read the Vontobel full year 2023 results, presentation, and annual report.
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