Vontobel’s 2020 results boosted by Covid induced catch-up effect

Vontobel generated net new money of CHF14.8 billion (US$16.6 billion) in 2020 – an increase of 7.4% year-on-year.

The growth was driven by ‘strong demand’ for its investment products in an environment marked by an ‘increasing global need’ for investments, the company stated in its full year 2020 results.

The banking group, led by CEO Zeno Staub (pictured), reported the volume for outstanding structured products and debt instruments stood at CHF8.2 billion as of 31 December 2020, down from CHF10.3 billion at year-end 2019.

The company benefited from the large transaction volumes in the markets in spring 2020

Its structured products were used by almost 500 banks and around 460 external asset managers (EAMs) via digital and traditional advisory channels. In geographical terms, Vontobel focuses on Switzerland, Germany and the Asian markets of Hong Kong SAR and Singapore.

After private investors refrained from making additional investments in the first half of 2020 due primarily to the Covid 19 pandemic, a catch-up effect was visible in the second half of 2020, resulting in strong net inflows of new money. Following the hard lockdown, clients – especially those in Switzerland and in Europe – looked for new investment opportunities as from the third quarter of 2020.

In 2020, Vontobel expanded its market position for structured and leverage products in Switzerland and other European markets. In Switzerland, it increased its market share for investment products to 23.6% (from 23.3% the previous year) while it held 43.9% of the market for leverage products (2019: 40.9%), making it the number one issuer in both categories.

According to SRP data, Vontobel issued 14,652 structured products (including 12,450 reverse convertibles), 7,622 leverage products and almost 115,000 open-ended turbos in its domestic market in 2020. The shares of Roche, Novartis and Nestle were favoured by the Swiss investor with the S&P 500 the preferred index.

Two more markets where it performed well were Germany and Italy. In the former it ranked number four for structured products with 11.1% of the market (2019: 7.5%) while in Italy it saw its market share increase to 17.5%, from just 1.3% in 2019. Vontobel was the manufacturer behind 215 structured products in the Italian market, compared to just 57 in 2019. All Italian products featured the reverse convertible payoff, including 144 that were linked to a worst-of basket. Underlyings focused on shares of local companies such as Eni, Intesa Sanpaolo and Unicredit.

Since autumn 2017, Vontobel has also offered leverage products in Hong Kong SAR – the world’s largest derivatives market – where it achieved a market share of 1.9% in 2020, compared to 1.5% in 2019.

The platforms & services business, which is serving institutional clients, generated growth in net new money of 7.8% or CHF1.1 billion (CHF 0.5 billion) and increased turnover on its platforms. The company benefited from the large transaction volumes in the markets in spring 2020, which subsequently normalized over the year. Operating income totalled CHF152.3m and was in line with the previous year (2019: CHF150.9). Vontobel achieved a stable gross margin of 50 basis points in the business with EAMs, which accounts for around half of operating income in this client unit.

In 2020, the bank put its investment solutions to the test from an ESG perspective. In this context, it defined two sustainable product categories: integrated ESG and sustainable. As of 31 December 2020, these two product categories comprised a total of CHF126.5 billion.

Click the link to read the full Vontobel 2020 results, presentation and annual report.