VZ Holding AG

SIX:VZN

Earnings Call Analysis

Earnings Call Transcript 2021-Q4

[Abrupt Start]

[Matthias Daniel Reinhart]

...you

measure

that

number

in

FTEs,

which

reflects

a

9.3%

growth

rate

coming

from

2020.

And

if

we

look

into

2022,

we

see

more

or

less

similar

development

that

we

foresee

going

into

the

current

year.

And

this

is

the

prerequisite

to

increase

our

net

new

money

number.

And

as

you

might

have

seen,

the

net

new

money

number

came

in

last

year

in

2021

quite

remarkably

high.

And

if

we

divide

the

net

new

money

number

by

the

consulting

capacity,

we

reached

a

CHF 25.6

million

net

new

money

number

per

consulting

FTE,

which

is

clearly

above

our

target

range

of

CHF

17

million

to

CHF

20

million.

At

the

moment,

I'm

not

really

sure

that

we

can

keep

that

number

going

forward.

So,

if

we

project

the

business

going

into

the

future,

we

still

stick

to

the

CHF

17

million

to

CHF

20 million

target

range.

But

if

we

see

the

CHF

25

million

number

or

somewhere

in

between,

if

we

see

that

confirmed

over

the

next

years,

then

we

have

to

change

our

target

range

and

move

that

up

a

little

bit.

But

at

the

moment,

this

is

not

the

time

to

do

that

and

to

communicate

that.

So

far,

the

business

development

on

the

core

side

and

then,

of

course,

we

have

seen

the

UK

business

starting

in

May,

June.

At

that

time

point,

we

completed

our

acquisition.

We

did

not

acquire

100%

of

the

Lumin

Group.

We

basically

acquired

50.1%

of

the

Lumin

Group

and

agreed

to

buy

the

remaining

shares

in

2026, five

years

after

completion

of

the

first

step.

In

the

meantime,

we

experiment

with

the

Lumin

Group

in

order

to

integrate

as

many

processes

and

experiences

of

our

existing

business

model

in

Switzerland

into

the

UK

market,

and

we

have

already

done

quite

a

substantial

amount

of

things,

and

we

are

quick

–

at

the

moment,

they

are

really

positive

that

we

see

quite

an

interesting

opportunity

there.

By

using

our

business

model

and

implementing

our

experiences

out

of

Switzerland

into

the

UK

market,

especially

on

the

marketing

side,

but

also

on

the

side

of

developing

an

increase

and

increasing

the

consulting

workforce.

Another

element

that

we

worked

on

last

year

was

our

financial

portal,

which

is

the

digital

interface

vis-à-vis

our

clients,

a

very

important

element

going

forward,

it's

not

only

a

prerequisite,

it's

basically

the

element

that

will

help

us

to

increase

the

penetration

of

our

existing

platform

clients

in

terms

of

platform

usage.

What

we

did

last

year,

we

successfully

migrated

our

existing

client

on

to

an

upgraded

version.

That

was

quite

a

cumbersome

task,

but

it –

the

result

is

really

promising.

We

basically

exchange

our

technology

provider

and

platform

to

a

much

more

elaborated

version

and

this

will

help

us

to

be

– not

only

to

increase

the

performance

vis-à-vis

our

clients

in

terms

of

speed

as

an

example,

but

also

to

be

much

more

agile

in

terms

of

implementing

new

features

much

quicker

and

just

to

be

much

faster

in

developing

that

platform.

That's

also

an

element

that

will

help

us

going

forward.

For

example,

this

year

we

will

introduce

quite

a

substantial

number

of

new

features.

I

will

come

to

that

point

at

the

end

when

we

go

to

the

outlook.

On

the

financial

side,

very

quick,

top

line,

plus

18.3%,

operating

expenses,

plus

15.8%,

resulting

in

a

slight

leverage,

increasing

the

EBIT

margin

to

43.1%.

Bottom

line

increased

22%

coming

to

CHF

143.2

million

net

profit,

which

reflects

a

margin

of

36.8%

on

the

top

line.

And

the

balance

sheet,

very

solid.

Go

to

that

a

little

bit

more

in-depth

afterwards

and

net

new

money

came

in

with CHF

4.8

billion,

already

mentioned

that

before,

and

assets

under

management

reached

a

level

of

CHF

39

billion,

coming

from

CHF

31.5

billion

a

year

before.

Page

number

4, you

see

the

development

of

the

revenue

streams

over

the

past

six

years

and

we

did

see

quite

an

impressive

increase

of

18.3%

on

the

top

line.

And

if

you

go

into

the

different

components,

the

five

most

important

components,

starting

with

the

largest

one,

that's

the

dark

blue

one,

shaded

one,

management

fees

on

the

AuM,

which

make

up

roughly

two-thirds

of

total

revenues,

increased

24.4%,

more

or

less

in

step,

of

course,

with

the

AuM

development,

which

we

discussed

later

on.

The

next

[audio gap]

(00:06:38) slide

of

our

management

fees,

that's

the

light

blue

shaded

of

CHF

27.3

million,

increased

12.8%.

Other

management

fees

are

not

depending

on

the

AuM

development,

they

are

typically

associated

with

managing

corporate

clients

and

pension

fund

schemes

of

corporate

clients

or

insurance

portfolios

of

corporate

clients.

And

there,

we

do

not

charge

or

are

not

getting

revenues

on

a

certain

base.

We

basically

charge

either

on

a

per

employee

basis

or

a

charge

on

a

hourly

basis.

Then

the

net

earned

premiums,

which

is

our

–

reflects

our

insurance,

property and

casualty

insurance

business.

Net

earned

premiums

reflects

the

net

earned

premiums

after

reinsurance

charges

increased

23%

and

it

goes

more

or

less

in

step

as

in

the

years

before.

And

the

next

element

is

the

gray

shaded

one,

and

that's

our

only

components

that

we

are

not

really

happy

with,

because

we

are

not

– we

cannot –

we

don't

have

a

great

visibility

into

the

future.

As

you

remember,

banking

income

encompasses

interest

rate

business

that's

easy

to

understand

and

it's

also

easy

to

foresee

into

the

future,

but

it

also

includes

commissions

and

trading

activities.

I

will

go

a

little

bit

more

in-depth

afterwards

into

that

point.

And

this

is

the

element

on

our

total

revenue

stream,

which

is

not

really

growing.

It's

basically

decreasing

going

forward.

But

all

in

all,

banking

income,

including

interest

rate

business

is

quite

stable.

Then

the

last

component,

the

consulting

fees,

these

are –

the

revenues

generated

out

of

our

–

of

the

pure

consulting

business

basically

charged

on

an

hourly

billing.

And

that

element

also

increased

by

10%.

And

this

is

– was

more

or

less

in

step

with

the

increase

of

our

initial

meetings

that

we

measure,

increase

of

our

marketing

responses

that

we

achieve.

So

that's

the

very

front-end,

out

of

which

we

generate

our

platform

clients.

So,

so

far

to

the

revenues,

now

I

would

like

to

go

a

little

bit

more

in

depth

or

deeper

into

the

banking

income,

page

number

5.

As,

as

already

discussed,

overall,

they

are

quite

volatile

and

difficult

to

predict,

and

we

see

three

components.

Actually

the

component

of

the

interest

rate

business,

this

is

not

so

volatile

anymore

and

it's

– but

this

is

really

predictable

going

forward.

And

it's

also

growing

basically

in

line

with

the

overall

balance

sheet

total.

So

there,

we

don't

have

the

predictability

issue.

But

on

the

other

two

elements,

the

trading

result

and

the

transaction

fee

income,

there,

we

do

have

the

predictability

issue.

Both

of

these

two

last

components

basically

decreased

over

the

past

couple

of

years

and

–

but

overall

they

do

not

make

up

a

real

big

portion

of

our

total

revenue

number

anymore.

Six

years

ago,

that

was

completely

different.

Now,

it

is

really

not

neglectable,

but

it's

at

least

not

an

important

element

anymore.

Nevertheless,

we

see

the

trading

result

overall

stabilized

going

forward

because,

I

mean,

we

see

more

volume

but

less

activity,

and

in

total

that

should

be

a

result

in

a

stable

development.

And

on

the

transaction

fee

side,

the

dark

blue

shaded

component,

there,

we

foresee

still

ongoing

decrease.

But

overall,

if

you

take

all

three

components

together,

we

basically

calculate

with

a

more

or

less

stable

number.

But

all

other

components

of

our

business

and

revenue

components

should

basically

increase

going

forward

in

line

with

more

clients

and

more

penetration

of

our

existing

clients.

Now,

number

6,

you

see

the

net

profit

line

on

a

on

a

long-term

basis

comparison.

Here

again,

you

see

the

22%

increase

from

the

2020

level

and

already

in

2020, we

did

see

a

15%

increase

from

the

2019

level.

And

overall,

the

long-term

target

is

a

36%

net

profit

margin,

we

are

slightly

above

that

level

and

are

not –

I

think

we

are

not

in

a

position

to

change

that.

We

still

believe

that

we

don't

see

going

forward

a

much

greater

or

bigger

leverage.

We

are

basically

more

inclined

to –

if we see

scaling

effects,

we

are

much

more

open

to

use

these

productivity

gains

and

scaling

effects

to

use

in

order

to

increase

our

attractivity

vis-à-vis

our

clients

and

to

increase

–

so

that

is

helpful

to

increase

our

client

growth,

so

that

the

client

number

can

grow

going

forward

and

also

to

increase

our

attractivity

on

the

job

market

to

gain

as

much

talent

as

possible.

And

therefore,

we

are –

going

forward,

we

are

basically

planning

with

a

stable

long-term

net

profit

margin

of

36%.

Now,

on

page

number

7,

some

information

on

the

operational

business

in terms

of

what happens

at

the front-end.

On

the

right

side,

you

see

the

net

new

money

development, CHF

4.8

billion,

upper

right

corner

of

that

chart,

number

7.

It's

number

7.

And

if

divide

the

CHF

4.8

billion

by

the

188

FTE

capacity

at

the

consulting

front-end,

you

get

on

the

lower

right

end

the

CHF 25.6

million

net

new

money

per

consultant

FTE.

And

that

number

is

clearly

above

our

CHF

17

million

to

CHF

20 million

target

range

of

net

new

money

per

consultant

FTE.

As

I

mentioned

already

at

the

beginning,

it's

–

at

the

moment,

it's

questionable

if

we

can

really

keep

that

number

at

this

high

level.

It

is

possible.

Of

course,

we

do

have

the

ambition

to

reach

that

again.

But

before

we

can

really

set

that

new

level

as

a

target,

we

have

to

confirm

it

not

only

one

year.

We

have

to

confirm

it

two

years

in

a

row

so

that

we

can

see.

Well,

we

can

calculate

and

measure

with

a

new

metrics.

But

at

the

moment,

I

would

still

stick

to

the

former

range

of

CHF

17 million

to

CHF 20

million

per

FTE

and

calculate

–

take

that

as

a

basis

for

the

future

development

if

you

project

the

business

on

a –

into

the

future.

What

is

clearly

–

what

can

clearly

be

set

is

the

capacity

development

there,

we

see

a

development

from

188

FTEs

to

a

204

FTEs.

This is –

there

we

have

a

lot

of visibility

of

what's

going on

because

we

do

the

training

internal

of

all

these

new

consultants,

and

that's

why

we

know

exactly

what

– more

or

less

what

the

development

should

be

going

forward.

Now,

on

page

number

8,

you

see

what

happens

on

the

wealth

management

side.

Again,

we

see

the

AuM

development

of

plus

24%

coming

from

CHF

31.5

billion

going

to CHF

39

billion

by

the

end

of

the

year,

so

that's

a

24%

increase.

Of

course,

stock

market

helped.

But

one

has

to

bear

in

mind

that

the

bond

markets

basically

were

negative,

so

it's

not

only

clear

sunshine.

It

was

not

only

clear

sunshine,

as

you

may

know.

There

were

also

shadows

on

the

financial

markets.

But

it

was

very

helpful

that

we've

seen

the

stock

market

increasing

that

considerably.

And

if

you

break

the

AuM

total

down

into

PM

mandates

in

the

other

line,

we

see

that

the

margin heavy

line,

the

PM

mandates

increased

even

stronger

than

the

other

line,

which

typically

bears

lower

margins.

So,

that's

helpful

going

forward

to

keep

the

margin

level

at

the

existing

level.

Net

new

money

in

the

longer

timeline,

you

see

constantly

increasing

from

starting

in

2017

with

CHF

2.3

billion

going

to

CHF 2.6

billion,

CHF

2.732 billion,

and

now

reached

CHF

4.8

billion.

As

I

said

before,

if

we

can

keep

the

net

new

money

per

consultant

at

the

same

level,

we

should

even

be

able

to

overshoot

that

number

in

2022.

But

I

would

be

a

little

bit

more

cautious

and

calculate

with

a

slightly

lower

number

than

the

CHF

4.8

billion

just

because

of

the

reasons

that

we

just

discussed

before.

What

is

very

helping

and

what

is

basically

the

crucial

element

is

the

development

of

the

clients,

the

number

of

clients.

It

represented

in

the

two

last

lines

on

that

chart,

and

very

positive

was

the

delta,

basically,

the

net

new

client

number

that

we

gained

over

the

2021

period

or

during

the

year

of

2021,

reaching

8,179.

This

is

really

remarkable

compared

to

the

last

year,

which

was

already

quite

good.

And

as

we

look

into

the

future,

we

believe

that

we

can

keep

that

number

at

least

on

that

level.

So,

it's

not

that

we

– that's

not

a

–

whatever

a

data

point

that

is

completely

out

of

scope.

It's

really –

it's

going

that

line

further

up,

we

believe,

because

demand

is

just

increasing.

And

it's

really

– and

also

our

front-end

is

increasing

or

everything

helps

to

increase

that

number

going

forward

with

the

result

of that

our

bucket

of

clients

on

the

wealth

management

side

increases

– will

increase

steadily

going

forward

and reaches

now

57,000

or

a

little

bit

more.

And

if

you

calculate

that

over

the

next

five

years,

it's

easy

to

understand

that

we

see

sometimes

not

only

five

digits,

but

six

digits

on

the

number, on

the

second

last

sign.

Page

number

9,

if

we're

talking

about

the

wealth

management

clients,

the

total of

the

wealth

management

clients,

we

work

on

increasing

the

penetration,

cross-selling

of

our

five

or

six –

five

platforms

that

we

work

on.

That's

a

very

important

element

going

forward

not

only

to

bring

in

new

clients

and

bring

them

and

convert

them

on

one

platform.

But

as

soon

as

you

have

a

client

on

one

platform,

we

start

trying

to

cross-sell

our

other

platform.

So

for

example,

if

you

start

with

a

portfolio

management

mandate

as

a

client,

that's

a

typical

situation.

Then,

you

start

cross-selling

the

mortgage

platform,

the

insurance

platform.

And

if

he's

younger

than

65,

you

start

cross-selling

the

third

pillar

platform,

the

second

pillar

platform.

And

also,

basically,

the

banking

platform,

we

understand

on

the

banking

platform,

the

basic

services

of

a

bank

on

payment,

transactional

side

and

custodian

side

as

services,

right.

And

doing

– our

targets

are or

the

target

is,

overall,

that

we

bring

33%

of

our

total

wealth

management

client

bucket

or

silo

to

situation

that

they

use

three

or

more

platforms.

Now,

we

are

at –

on

the

right

side

of

the

page

number

9.

You

see

that

on

a

number

of

21.6%.

So

we

increase

that

number

every

year

somewhere

around

2

percentage

points.

Bearing

in

mind

that

if

you

add

new

clients

of,

let's

say,

8,000,

these

8,000

do

typically

start

with

one

platform.

And

it

takes

at

least

two

or

three

years

until

you

can

cross

sell

the

second

or

the

third

platform.

So

it

takes

a

lot

of

time,

so.

And

if

we

increase

the

number

of

clients

every

year

with

a

higher

absolute

number,

it's

getting

more

and more

difficult

to

increase

to

the

three-plus

platform

clients.

But

nevertheless,

we

try

hard,

and

we

are

optimistic

that

we

can

–

that

we

achieve

the

33%.

At

least

mid-term,

if

you

calculate it

mid-term,

then

you

basically

should

reach

to

33%

in

six

years.

Yeah.

Let's

see.

It's

a

long

time,

but

we

are

optimistic

that

we

have

reached

that

target.

Then

number

10,

that's

an

important

information

also

supporting

all

our

cross-selling

efforts,

by

the

way,

it

helps

to

understand

how

satisfied

our

clients

are.

And

as

I

already

mentioned

in

the

last

reporting

season

or

seasons,

we

measure

the

client

satisfaction

with

or

along

the

methodology

of

the

net

promoter

score,

and

we

have

different

measurement

points.

And

one

measurement

point

is

as

soon

as

a

client

went

through

a

consulting

phase,

so

basically

concluded

a

consulting

project,

he

is

basically

asked

the

question

whether

or

what's

the

likelihood

that

he

is

going

to

recommend

our

service

to

a

good

friend.

And

there

he

can

basically

take

a

box

from

0

to

10,

10

and

9

or

10

is

extremely

likely

and

0

is

not

at

all

likely.

And

the

9s

and

the

10s

are

the

promoters.

The

7

and

8

are

basically

neutrals

or

passives.

And

everything's

below

7,

basically

6, 5,

4

and

so

forth

are –

is

a

detractor.

And

then

you

take

all

the

promoters

as

a

percentage

of

the

total

[ph]



asked (00:24:52) population

as

a

percentage

point

minus

the

percentage

points

of

all

detractors

of

the total

[ph]



asked (00:25:02)

population,

and

that

gives

you

the

NPS,

the

Net

Promoter

Score.

So,

mathematically,

the

score

can

go

from

plus

100

to

minus

100.

And

if

we

look

at

our

consulting

clients

on

the

left

side

of

the

page

10,

you

see

we

reached

a

net

promoter

score

in

2021

of

72.1,

which

is

extremely

high.

Same

thing

in

the

middle

of

the

portfolio

management

client.

Here

we

ask

all

clients

in

a

regular

process,

every

four

year

basically,

to

answer

that

questions,

along

with

other

questions,

of

course.

And

there

we

reached

an

NPS

of

83.1,

which

is

also

extraordinary

high.

And

the

third

measurement

point

that

we

illustrate

here

is

the

financial

portal.

And

that's

a

somewhat

different

measurement

point,

because

that's

a

measurement

point

where

we

ask

people

that

have

an

issue

with

the

financial

portal

when

they

want

to

reach

our

hotline.

Our

– that's

basically

the

first

support

line.

And

then

they

get

whatever

advice

on

how

to

solve

the

problem

on

the

financial

portal,

typically

handling

problems

or

technology

problems,

either

with

smartphone

or

tablet

and

so

forth.

And

at

the

end

of

that

process,

we

asked

the

same

client,

the

NPS

question,

and

there

we

reached

typically

a

lower

number,

of

course.

But

still,

that

number

is

very

high

compared

to

other

industries

or

other

competitors,

as

far

as

we

understand

it.

But

that

gives

you

an

idea.

I

mean,

what's

the

sentiment

amongst

our

clients

and

also

gives

you

an

idea

on

what

the

impact

is

of

our

service

to

these

clients.

Then

on

page

number

11,

you

see

the

branch

office

network

developing

on

– yeah,

in

Switzerland,

we

will

open

three

new

branch

offices

over

the

next

24

months,

so

two

years.

So,

it's

a

timeline.

Not

only

one

year,

it's the

two

year

timeline.

We

will

open

one

in

Bellinzona,

which

is

the

second

one

in

the

Italian

speaking

part;

another

one

in

Nyon,

that's

the

French

speaking

part

of

Switzerland;

and

in

[ph]



Ville (00:27:52),

that's

the

Swiss

German

speaking

part

of

Switzerland.

So,

three

new

branch

offices

in

Switzerland

foreseen

over

the

next

24

months.

Nevertheless,

the

focus

will

be

not

only

to

increase

the

number

of

branch

offices.

That's

not

the

idea

of

course.

But

to

increase

to

the

total

front-end

capacity

and

by

doing

that,

we

basically

increase

our

existing

branch

offices

in

terms

of

capacity.

That's

much

more

to

focus

rather

than

– I

mean

going

forward

over

the

next

5

to

10

years

we

don't

see

a

doubling

of

our

branch

office

number.

It's

much

more

that

we

add

on

some

other

locations.

But

overall,

the

focus

is

much

more

to

increase

our

existing

branch

offices

in

terms

of

capacity.

Then

on

the

Germany,

the

German

side,

we

will

open

our

–

in

the

process

of

opening

a

branch

offices

in

Lörrach.

That's

in

the

border

region

to

Basel,

it's a

very

attractive

region

in

terms

of

cross-border

issues

because

there

are

many

Germans

living

in

Lörrach

and

Freiburg

and

in Breisgau

in

that

region

and

working

in

Basel,

especially

in

the

pharma

industry.

It's

about

50,000 people

working

out

of

that

region

in

Basel,

and

they

– all

of

these

potential

clients

basically

do

have

a

pension

plan,

a

Swiss

pension

plan,

and

they

have

a

lot

of

tax

issues

on

the

cross-border

side.

And

there

we

are

basically

helping

these

clients

to

basically

plan

their

retirement

and

do

the

right

–

take

the

right

decisions

on

the

tax

side

and

everything.

And

it

is

a

very

interesting

entry

point

for

new

clients

in

that

border

region.

That

has

already

started,

and

it's

quite

positive,

the

developments,

of

course.

Then

in

the

United

Kingdom,

we

started

last

year,

out

of

St.

Albans,

a

new

branch

office

in

London,

in

the

city

of

London.

And

that's

very

important

to

have

a

premise

and

operate

the

premise

in

London

itself,

in

the

center

of

London.

And

that's

done,

and

we

are

going

forward

in

the

United

Kingdom

and

see

quite

interesting

development

hopefully.

Then

on

the

financial

side,

you

see

page

number

3.

There,

again,

the

five

basically

or

six

different

revenue

streams

totaling

into

the

operating

revenue

number

of

CHF

388.9

million,

increasing

by

18.3%.

And

then

you

see

the

three

cost

lines.

Personnel

expenses

increasing

12.3%.

Other

operating

expenses

significantly

higher

increase,

25%

available

to

debt.

Come

to

that

later

on

more

in

detail.

And

then

the

expenses

of the

insurance

contracts,

so

that's

basically the

claims that we pay

on

the

property, casualty

side, that

we

take on

our

books, and

this

increased –

that number

increased

substantially.

But that's

a

base

effect because,

in

2020, we

have

seen

almost

an

extremely

low

claims

number

whereas,

in

2021,

the

development

of

the

claims

normalized

and

came

back

to

the

levels

that

we

have

seen

in

2019 and

in

2018 in

terms

of

the

KPI.

So

that's

not

a

disturbing

number, it's

basically

a

normalization

of

the

situation.

That's

okay.

EBITDA,

next

slide,

14,

page

14,

going

from

the

EBITDA

number

down

to

the

net

profit

number.

EBITDA

is

not

so

meaningful,

much

more

meaningful

is

the

EBIT

number.

Because

of

certain

IFRA

methodology

that

has

changed.

Today,

it's

much

more

the

EBIT

number

that

is

really

meaningful.

And

then

you

go

down

to

the

profit

before

income

tax

and

income

tax,

which

increased slightly

higher

than

in

the

year

before,

and

then

we come

to

the

net

profit

above

22%.

Page

number

15,

some

more

insights

on

the

personnel

expenses.

As

you

know,

we

have

a

long-term

personnel

expense

ratio

that

we

target

or

that

we

basically

envision

at

39%.

We

are

below

at

37.2%.

If

this

39%

target

is

too

high,

needs

to

be

scrutinized

and

monitored,

maybe we

will

change

that

going

forward.

It's

– between

the

personnel

expenses

and

operational

expenses,

there

might

have

– there

might

be

–

might

come

some

structural

changes

because

we

are

outsourcing

more

and

more

services

that

we

do

not

execute

internally,

and

then

you

have

a

shift

from

the

personnel

expense

line

down

to

the

operational

expense

line

which

happens

over

time.

So,

that's

not

a

jump

or

a

leap.

Typically,

it's

a

smooth

development

of

these

effects.

In

total,

we

have

1,142.5

FTEs

employed.

This

translates

into

headcounts

via

– on

average,

we

have

85%

[indiscernible]



(00:34:34)

or

average

employeeship.

So

that

translates

into

1,340

employees

or

head

count.

Going

forward,

going

to

2022,

to

increase

the

head

count

at

least

at

the

same

speed

that

we

have

seen

last

year,

maybe

a

little

bit

more

compared

to

last

year.

Next

slide,

page

16,

other

operating

expenses.

Our

long-term

target

here

is

that

we

are

landing

somewhere

between

11%

and

13%

with

our

operating

expenses.

On

the

top

line,

we

came

in

with

12.6%,

but

it's

quite

obvious

that

we

have

seen

a

substantial

increase

of

25%

coming

from CHF

39

million

up

to

CHF

49

million.

And

the

major

impact

is

– happened

basically

on

the

general

and

administrative

expenses.

They

include

all

IT-related

investments

and

IT-related

costs.

And

one

important

driver

last

year

was

the

installation

of

that

new

e-banking

technology.

I

already

discussed

that

before

where

we

migrated

our

total

client

base

on

a

completely

new

platform,

and

this

was

quite

costly,

but

the

effect

will

be

seen

going

forward.

I

already

explained

that.

And

it

also

includes

the

UK

acquisition,

all

one

time

or

one-off

effect

of

an

acquisition.

It's

included

there.

And

it's

also

– it

does

also

include,

as

I've

said

before,

all

upgrading

elements

of

our

financial

portal.

Going

forward

into

2022,

we

clearly

don't

see

such

a

strong

development.

Again,

we

foresee

basically

an

increase

somewhere

between

3%

and

5%

of

the

CHF 49

million,

so

that

we

see

a

certain

normalization

of

that.

And

also

importantly,

office

space.

There,

we

have

also

seen

quite

a

substantial

increase

of

19%.

And

there,

the

reason

behind

that

is

in

Zurich,

we

have

a

reshuffling.

You

see

a

reshuffling

of

our

total

space

usage.

And

there,

we

still

have – we

still

pay

the

double

rent

because

we

have

a

double

– still

the

double

size

of

space

that

we

rent.

And

this

will

be

cleared

by

–

in

the

second

half of

this

year.

And

then

all

the

work

has

– should

be

done.

And

afterwards,

we

also

should

see

a

normalization.

So,

this

is

not

– this

is

really

extraordinary,

the

19%

increase

in

the

office

space

line.

Number

17,

EBIT

margin,

long-term

target,

42%.

We

came

in

with

43.1%,

so

above

our

long-term

target.

At

the

moment,

we

still

believe

to

keep

at

that

level,

at

the

42%

level

as

a

target

level,

although

we

see

an

overshooting

of

that

number

last

year.

If

we

see

the

same

picture

in

the

second

–

in

the

2022

numbers,

then

we

can

think

about

of

changing

it.

But

at

the

moment,

we

keep

it

at

that

level.

On

page

number

18,

you

see

the

balance

sheet,

very

simplified

form

of

the

balance

sheet.

It

should

reflect

basically

the

simplicity

of

our

balance

sheet,

especially

of

the

left

side

or

the

asset

side

of

the

balance

sheet

because

if

you

look

at

our

balance

sheet,

we

basically

invest

our

clients'

money,

the

client

– the

customer

deposits.

Either

they

are

allocated

to

the –

to

the

account

that we

operate account

of

– that

we

operate

with

the

Swiss

National

Bank,

that's

the

first

line,

or

we

allocate

these

funds

into

a

highly

diversified

residential

mortgage

portfolio

in

Switzerland

or

we

allocate

it

into

a

age in

a

very

highly

liquid

asset

bond

portfolio.

Basically,

marketable

securities,

but

HQLA-profiled

bond

portfolio,

which

can

be

very

simply

liquidated

and

turned

into

liquidity.

These

are

the

three

buckets

that

we

basically

operate

and

it's

very

simple

and

very

transparent

and

as

low

risk

as

possible.

The

balance

sheet

total

increased

from

CHF

5

billion to CHF

5.8

billion.

And

the

increase

is

primarily

or

almost

only

driven

by

the

increase

of

the

customer

deposits

and

new

clients,

basically.

Then

on

to

page

19,

you

see

the

payout

ratios

developing

from

40%

up

to

44%.

We

will

increase

the

dividend

per

share

from CHF

1.23

to

CHF 1.57.

This

is

reflecting

an

increase

of

28%.

So,

quite

substantial

to

be

attractive

for

the

capital

market.

And

on

the

right

side,

you

see

the

–

some

risk

ratios,

important risk

ratios,

total

equity,

CHF 700

million

leads

to

a

equity

ratio

or

leverage

ratio

of

12.1%,

which

is

very

sound.

And

core

capital

ratios

of

25.2%,

they

decreased

slightly

and

this

is

basically

only

because

we

have

executed

the

acquisition

in

the

UK.

There,

we

not

only

have

considered

that

50.1%

stake,

we

basically

considered

as

the

– 100%

stake.

Although

we

did

not

take

the

100%

now,

but

since

we

have

an

option

to

take

over

100%

until

2026,

we

have

to

consider

this

acquisition

as

a

full

100%

acquisition.

That's

why

the

ratio

of

core

– the

core

capital

ratio

came

down

a

little

bit

to

25%.

Outlook

on

page

number

21,

on

the

business

side,

there

is

not

much

changing.

We

are

working

on

our –

on

developing

our

existing

business,

on

making

the

business

greater,

bigger,

even

more

profitable,

hopefully.

And

we

continue

–

that

means

that

we

continue

to

work

on

–

be

more

attractive

to

our

clients

to

increase

the client

inflow,

to

increase

the

consulting

capacity,

to

work

on

the

conversion

side

from

consulting

clients

to

platform

clients.

And

within

the

platform

client

bucket,

we

work

on

increasing

the

platform

usage

per

client.

So

that's

the

core

on

which

we

work.

And

then

the

second

element,

which

is

very

important

that

should

support

the

whole

process,

the

whole

client

journey,

is

to

develop

the

financial

portal,

our

digital

interface

to

our

clients,

and

bring

in

and

add

additional

features.

And

we

start

with

the

trading

– the

e-trading

desktop

which

is

getting

live

to

all

clients

by

mid-March.

Now,

we

are

in

a

friends

and family

program

and

we

will

release

that

mid-March

to

everybody.

At

the

same

time,

we

will

introduce

an

SOB

process

which

is

a

self on boarding

process,

fully

digitalized

which

is

very

rare

here

in

Switzerland. We

are

one

of

the

first

providers

that

has

a

fully

digitalized

self on boarding

process

to

two

new

clients

but

also

to

existing

clients,

so

new

client

can

open

very

simply

a

new

account

but

also

existing

clients

can

open

new

clients

very

simply.

And

then

another

element

is

the

cryptocurrency

trading.

It's

now

– it's

already

open

via

a

telephone

trade.

Now,

we

are

opening

and

developing

that

and

providing

it

via

the

financial

portal,

the

digital

interface,

so

that

you

can

digitally

trade

online

the

cryptocurrencies.

But

be

aware,

we

don't

open

all

cryptocurrencies

to

everybody.

We

are

very

restricted

to

a

maximum

10 –

selected

number

of 10

cryptocurrencies,

and

that

should

also

be

released

by

mid-March.

Then

in

the

second

half

of

2022,

we

will

basically

introduce

on

the

digital

platform

on

the

financial

portal

introduced

all

functionalities

that

a

Revolut

or

Neon

Bank

offers

to

its

clients,

which

is

–

it's

basically

payment

services,

card

management,

card

services,

and there

we

integrate

old

functionalities

that

the

Revolut

platform

does

provide

and

integrate that

into

the

financial

portal.

That

makes

it

very

strong,

and

it

simplifies

many

things.

That

includes,

for

example,

peer-to-peer

payments,

[indiscernible]



(00:46:02)

overview

of

all

transactions –

on

the

payment

side,

physical

card,

but

also

virtual

card

management

and

so

forth,

right.

That

should

be

introduced

in

the

second

half

of

2022.

We

are

working

on

that,

and

it

looks

quite

positive

that

we

should

reach

that

level.

And

being

able

to

introduce

all

these

services,

the

prerequisite

was

that

we

had

needed

to

migrate

all

clients

last

year

on

that

new

state-of-the-art

e-banking

platform.

Then

in

Germany,

of

course,

we

work

on

the

marketing

side

very

intensively,

that's

the

core

theme

there.

And

in

UK,

we

intensify

the

integration

work.

We

put

a

lot

of

efforts

to

introduce

our

marketing

experience

out

of

Switzerland

into

the

German

– into

the

UK

market.

We work

on

installing

an

internal

advisor

trainee

program,

which

is

already

ongoing,

by

the

way,

we

have

already

five

participants,

so

it's

a

very

small

number

but

nevertheless,

it

shows

you

that

something

is

going

on

there.

And

we

also

work

on

further

integrate

smaller

IFA

organizations,

so

small

IFAs,

that's

an

interesting

element

to

add

on

and

to

grow

a

little

faster

than

if

you

just

do

it

on

an

organic –

in

an

organic

way.

Then

you

might

have

seen,

in

2023,

we

do

envision

some

personnel

changes

at

the

top

of

the

organization.

Me,

myself

basically,

is

moving

out

of

the

current

position

of

the

Group

CEO

by

the

end

of

this

year.

So

1st

January

of

next

year

of

2023,

Giulio

Vitarelli,

will

take

over

from

me

as

Group

CEO. Giulio

Vitarelli

is

a

very

experienced

person

and

he

is

already

since

1998

part

of

the

team

and

led

for –

since

2012

,the

Swiss

front

organization

including

all

the

consulting

activities

and

leading

all

the

branch

offices.

So

he's

very

experienced

and

will

take

over

from

me

and

stands

for

continuity

and

stability

in

that

way.

And

me, myself,

I

will take over

as

Chairman.

By

–

that

should

take

place

in

April

2023

and

I

will

take

over

the

position

from

Fred

Kindle.

Right.

And

on

the

financial

side

–

coming

from

the

situation

that

we

basically

increase

our

client

number

every

day

or

every

week

and

every

month,

we

should

see

constantly

increasing

top

line

and

a

constantly

increasing

bottom

line.

If,

of

course,

we

don't see

complete

disruptions

on

the

financial

markets

which

are

– which

can

really

distort

the

situation

short

term,

but

in

the

longer

term,

the

effect

is

quite

negligible.

And

given

the

situation

that

we

have

a

stable

market

going

forward,

we

should

basically

see

a

development

on

the

top

and

the

bottom

line

that

we

have

seen

on

average

in

the

past

years.

And

I

mentioned

that

already

the

transaction-based

revenues

on

the

banking

platform

is

unpredictable.

And

I

explained

that

before.

EBIT

margin

and

net

profit

margin

should

basically

leveling

at

the

target

levels

and

dividend

payout

increases

to

50%

over

the

next

coming

years.

So

far

to

the

presentation,

now

I

hand

over

to

the

operator

to

organize

the

Q&A

session.

[Operator]

We

will

now

begin

the

question-and-answer

session.

[Operator Instructions]



The

first

question

comes

from

Andreas

Venditti

from

Vontobel.

Please

go

ahead,

sir.

[Andreas Venditti, Analyst, Bank Vontobel AG (Research Firm)]

Yes.

Thank

you

for

taking

my

questions.

Maybe

can

I

start

with

the

actual

situation

in

the

Ukraine?

Can

you

maybe

confirm

that

you

don't

have

any

exposure

to

that,

which

I

think,

but

maybe

you

can

confirm

that?

And

what

other

impacts

you

might

see

from

the

whole

situation,

if

any

on

[indiscernible]



(00:51:48)?

Then,

next

question

will

be

on

the

margin

developments,

whether

you

can

provide

some

updates

there,

mainly

the

mix

shift

that

we

discussed

over

the

last

few

years.

How

you

see

that

going

forward?

And

maybe one

question

on

one

slide

that

is

not

in

the

pack

that

used

to

be

in

the

last

few

presentations,

which

is

related

to

some

indicators

of

activity

on

the

financial

portal.

Is

the

reason

that

we

had

this

significant

migration

and

that's

why

you

decided

not

to

show

these

indicators

on

the

slide

or

is

there

another

reason?

Thank

you

very

much.

[Matthias Daniel Reinhart]

Thank

you,

Mr.

Venditti.

To

your

last

question,

actually,

we

exchanged

that

chart

with

the

NPS,

the

Net

Promoter

Score

information,

which

we

thought

might

be

more

informative

to

the

audience

because

the

financial

portal, of

course,

with

the

activities

are

getting

higher

and

higher.

I

mean,

you

see

a

quite

a

positive

development

there.

We

can

add

that

if

you

like.

I

mean,

you

can

–

that's

no

problem.

But

at

the

moment,

I

think

it's

not

so

informative.

It

just

goes

up

every

month.

That's

okay.

But

we

can –

going

forward,

we

can

basically

add

that

information

or

some

similar

information

to

the

financial

portal

just

to

give

you

an

idea

on

what

the

activity

status

is

there.

Then

to

your

first

question,

Ukraine

exposure,

no,

we

don't

have

any

exposure.

We

don't

have

any

clients

stemming

or

coming

out

of

Russia

or

Ukraine

or

Belarus

or

somewhere.

As

you

know

and

assumed,

our

target

is

always

the

domestic

market.

We

don't

focus

on

any

cross-border

situation

except

new

–

that's

new,

that

we

are

focusing

in

a

very

small

region

in Lörrach,

Freiburg,

Basel.

So,

in

that

region,

we

are

developing

the

cross-border

situation.

But

that's

a

completely

different

question.

There

we

are

basically

onshore –

consulting

onshore

in

Germany

and

supporting

out

of

Switzerland

but

from

a

technical

edge.

So,

it's

not

a

classical

cross-border

situation.

And

the

impact

of

the

Ukraine

situation,

well,

we

don't

see

any

greater

impact,

except,

of

course,

what

we –

as

everybody,

what

we

are

in

a

certain

way

affected

by

the

stock

market

and

interest

rate

market

development.

There,

of

course,

we

have

a

certain

impact.

But

the

sentiment

amongst

our

existing

clients,

the

sentiment

amongst

the

new

clients

is

at

least

how

we

see

it

today

is

not

changing

at

the

moment.

So,

the

client

inflow

is

going

fine

and

at

the

moment,

we don't

see

really

a

disruption.

Hope

that

remains

that

way.

Then

the

margin

development

and

mix

shift,

you're

right,

we

discussed

that

many

times.

Overall,

we

left

a

lot

of

basis

point

on

the

table

over

the

past

six,

seven

years.

And

if

we

look

now

at

the

situation

in

the

2021

numbers,

we

see

basically

a

stabilization

compared

to

the

2020

numbers

and

they

came

in

at

excluding

the

banking

revenues,

came

in

at

a

level

of

72

basis points or

71.5

basis

points.

And

if

you

include

the

banking

revenues,

you

end

up

overall

at

90.6

basis

points.

So,

it's –

yeah.

That

was

the

same

number

more

or

less

in

2020.

And

if

you

go

back

in

2019,

that

number

was

97 basis points;

in

2018

it

was

104 basis points;

in

2015

it

was

123 basis points.

So,

we

left

33

basis

points

on

the

table

over

the

past

six

years,

which

is

remarkable.

And

at

the

same

time,

we

grew

the

total

business

and

we

believe

at

the

moment

that

we

are

in

a

stable

situation.

Of

course, you

have

certain

shifts

amongst

the

different

buckets,

second

pillar,

third

pillar

and

free

monies

that

is

invested

and

mortgage

and

everything.

But

overall,

we

don't

see

a

big

shift

anymore,

certainly

not

such

a

big

shift

that

we

have

seen

in

the

past

five,

six

years.

We

internally

calculate

with

a –

going

forward

with

that

we

leave,

let's

say,

1 basis

points

or

2

basis

points

on

the

table

going

forward

just

to

be

on

the

safe

side.

But

let's

see,

I

mean

–

but

we

don't

see

that

such

a

harsh

reduction that

we've

seen

in

the

past.

Hope

this helps.

[Andreas Venditti, Analyst, Bank Vontobel AG (Research Firm)]

Thank

you

very

much.

Yes.

[Operator Instructions]

[Operator]

So far,

there

are

no

more

questions.

[Matthias Daniel Reinhart]

Good.

[Operator]

Sorry to

interrupt.

We

have

a

follow-up

question –

we

have

a

question

from

Mr.

Mike –

Michael

Schulz

from

JMS

Invest.

Please

go

ahead.

[Michael Schulz, Managing Director, JMS Invest AG]

Hi.

Good morning,

Mr.

Reinhart.

I

have

a

question

regarding

the

margin

too.

So,

in

your

presentation

in

the

conclusion, in

the outlook, you said

that

you

see

the

net

profit

margin

and

EBIT

margin

going

back

to

the

basically

the

guided

or

longer

term

guided

range.

However,

you

also

said

that

general

expenses

would

be

not

declining

but

not

growing

as

fast

as

we

saw

it

now.

I

mean,

the

difference

would

then

at

the

top

line

margin

basically

also

is

not

declining

further.

The

difference

to

bring

that

back

to

the

longer

term

range would

then

come

from

the

personnel

expenses

that

would

have

to

grow

faster

than

your

top

line.

I

mean,

is

that

a

new

ambition

to

grow

your

capacity

faster

basically

or

how

do

I

have

to

understand

that?

Otherwise,

I

would

assume

a

certain

leverage

going

forward

if

your

top-line

margin

has

stabilized

more

or

less.

[Matthias Daniel Reinhart]

Yeah.

[Michael Schulz, Managing Director, JMS Invest AG]

Yeah.

[Matthias Daniel Reinhart]

Yeah.

Understand.

Thank

you,

Mr.

Schulz.

Of

course,

I

mean,

what

I've

said

does

not

really

match.

I

understand

that.

And

that's

also

clear.

But

I

want

to

be

on

the

cautious

side,

if

we

are

talking

about

targets

and

target

levels

and

that's

not

the

target

level

for

the

current

year.

It's

basically

all

this

– we

are

basically

talking

about

target

levels

of, let's

say,

three,

four,

five

years.

And,

there,

we

don't

see

at –

of

course,

you

are

absolutely

right.

I

mean,

if

I

add

up

all

what

I've

said,

then

you

should

basically

– that

should

basically

lead

to

higher

net

profit

margins.

And

–

but

just

to

be

on

the

cautious

side,

we

would

like

to

keep

it

at

the

36%

level.

And

this

is

the

major

number

that

needs

to

be

considered.

And

I

mean,

of

course,

this

year,

it

could

be

different.

This

year,

it

could

be

higher

if

everything

goes

well.

But

in

the

longer

term,

I'm

not

so

sure

because

we

want

to

be

–

from

a

strategy

point

or

strategic

point

of

view,

it

would

make

going

forward

and

to

grow

the

business

sustainably

longer

term

substantially,

it

would make

a lot

of

sense

to keep

some reserves

to

be flexible

on

the price

side

vis-à-vis

on

your products

or

on

your offerings,

and

to

be

more

– and

to stay

and

to become

more attractive

on

the

labor

market,

and

that

includes,

of

course,

more

attractive

salaries

at

the

end

of

the

day.

And,

combining

all

of

that

together

with

the

productivity

gains

which

we

will

attain,

we

clearly

reach

and

gain

productivity

improvements,

and

that

leads

to

a

scalable

effect.

But,

if

you

add

that

all

up,

and

I've

always

said

that,

we

do

not

target

a

leverage

primarily,

we

primarily

target

to

develop

and

grow

the

top

line.

And,

if

you

look

at

that

in

the

longer

term,

then

you

are

just

on

the

safe

side

if

you

keep

the

net

profit

margin

at

the

36%,

and

we

have

already

increased

that

from

the

35%

last

year

or

to

the

year

before,

I

believe, the

year

before.

[Michael Schulz, Managing Director, JMS Invest AG]

May

I

ask

another

one

or

two

questions?

[Matthias Daniel Reinhart]

Sure.

[Michael Schulz, Managing Director, JMS Invest AG]

One,

regarding

the

PM

mandates

and

the

share

of

the

assets

under

management

in the

mandates.

That

increased

to

63.6%

this

year

from

the

60%

level.

How

does

that

work

usually?

Are

these

new

clients

that

[ph]



complete

(01:02:34)

with

a

mandate

or

basically

start

with

a

mandate

with

you

or

is it

a

conversion

of existing

clients

from

self-managed

money

to

mandates?

What's

the

biggest

driver

there

and

how

do

you

see

that

going

on?

[Matthias Daniel Reinhart]

Yeah.

The

biggest

driver

is

the

net

new

client

inflow, clearly.

I

mean, that's

the

number one

driver. The

number two

driver

is the

cross-selling

efforts

with

the –

amongst

our

existing

platform

clients.

But

the

clear –

I

mean,

the

absolute

top

driver

is

the

ability

to

attract

new

clients

and that's

the...

[Michael Schulz, Managing Director, JMS Invest AG]

So,

the

new...

[Matthias Daniel Reinhart]

Yeah.

[Michael Schulz, Managing Director, JMS Invest AG]

...so,

the

new

money –

the

penetration

among

the

new

clients

is,

say,

around

80%,

90%

or

so

in

order

to

– or

just

higher

than

the

60%.

That's

basically

what

you're

saying.

I

mean,

the

new

clients

they

come

mostly

in

with

a

new

mandate.

[Matthias Daniel Reinhart]

Correct.

Correct.

[Michael Schulz, Managing Director, JMS Invest AG]

Okay.

[Matthias Daniel Reinhart]

Yeah.

[Michael Schulz, Managing Director, JMS Invest AG]

So,

this

should

go

on

going

forward

and

that...

[Matthias Daniel Reinhart]

Of

course

[indiscernible]



(01:03:45)

[indiscernible]

[Michael Schulz, Managing Director, JMS Invest AG]

(01:03:46)

[Matthias Daniel Reinhart]

Right.

Because

you

must

understand,

many

of

our

clients

of

our

existing

portfolio

management

clients,

when

they

are

retired,

they

use

their

money

on

a

–

at

least

they

take

out,

on

average,

I

would

say

some

3%,

4%,

5%

of

their

monies.

Ad

others

add

the

portfolio.

That

also

happens,

of

course.

But

the

typical

client

situation

is

that

they

live

out

of

their

funds

over

after

retirement.

So,

that's

why

the

largest

chunk

of

the

net

new

money –

of

the

net money,

I'm

talking

net

new

money

is

driven

by

new

clients.

[Michael Schulz, Managing Director, JMS Invest AG]

Okay.

And

just

maybe

one

last

question.

And

is

there

a

– looking

at

figures

on

how

your

performance

on

the

mandates

is

in

phases

like

last

year,

where

we had

kind

of

a

booming

market

and

maybe

this

year

where

we

have

more

difficult markets

more

difficult

markets compared

to

individually

managed

funds, I mean...

[Matthias Daniel Reinhart]

Sure,

that's –

yeah,

absolutely.

That's

one

of

the

key

tasks

the

asset

management

has

to

undertake

where

– by

measuring

the

performance

vis-à-vis

the

competition

and

vis-à-vis

the

benchmark.

And

there,

we

clearly

can

say

that

we

are

at

the

top

of

the

list

compared

to

every

bank

here

in

Switzerland.

And

we

do

that

on

a

very

systematic –

in

a

very

systematic

way.

Typically

what

we

see

is

that

the

best

measurement

or

comparison

of

your

own

performance

is

if

you

compare

the

performance

of

your

clients,

of

your

offerings

vis-à-vis

the

strategy

fund

that

a

–

let's

say,

Credit

Suisse

or

UBS

or Raiffeisen

or Migros

or

whoever

is

offering,

and

because

those

offerings

within

these

banks

are

typically

better

or

better

developing

than

the

individual

mandates

within

these

institutions.

So,

if

you

take,

for

example,

UBS,

the

UBS

Strategy

Fund

balanced

– the

balanced

profile

is

typically

better

performing

than

a

UBS

individually

managed

PM

mandate

with

the

same

risk

profile.

That's

what

we

can

prove,

because

we

have

thousands

of

portfolios

that

we

analyze

of

the

competition. And

if

you

take

our performance

of

our

mandates

and we

have

five

different

mandates

tied,

one

is

very

simple

executed

via

ETFs

and

index

funds,

very

sticky

to

the

strategy,

the

overall

strategy

and

the

profile

that

is

given.

And

that's

an

extremely

performing

mandate,

which

is

also

quite

inexpensive.

That's

very

attractive

for

our

clients.

Another

one

is

much

more

geared

or

leaned

at

the

asset

allocation

of

the

pension

fund

system.

That's

also

performing

extremely

well.

These

two

mandate

types

are

clearly

at

the

top.

And

if

you'll –

we

changed

that

in

by

mid-2019,

the

way

of

how

we

manage

the

assets.

They

are

from

the

beginning

at

the

top.

And

that's

why

they

are

also

chosen

by

every

–

by

mostly

by

all

consultants

to

recommend

to

their

clients.

[Michael Schulz, Managing Director, JMS Invest AG]

So

that's

a

big

selling

driver

for

you,

basically.

[Matthias Daniel Reinhart]

Absolutely.

Absolutely.

[Michael Schulz, Managing Director, JMS Invest AG]

Okay.

Okay.

Can

you

just

remind

me

how

much

is

the

average

assets

under

management?

How

much

still

is

the

equity

portion

and

the

bond

portion?

[Matthias Daniel Reinhart]

Overall,

if

you

take

the

CHF 39

billion,

it's

– let

me

see

– I

believe

30%.

30%,

yeah.

[Michael Schulz, Managing Director, JMS Invest AG]

In

equities?

[Matthias Daniel Reinhart]

Yeah,

30%

equity

exposure.

But

if

you

just

take

the

CHF

39

billion

to

total

AuM,

yeah.

[Michael Schulz, Managing Director, JMS Invest AG]

And

the

rest?

[Matthias Daniel Reinhart]

The

rest

is

basically

interest

rate linked.

And

some

of it is basically interest rate linked, and

some

of

it

is

also

mortgages.

So,

CHF

7.5

billion

is

basically

mortgages.

And

there, you

don't

have

any

price

effect,

you

don't

see

any

fluctuation

of

the

prices.

[Michael Schulz, Managing Director, JMS Invest AG]

Okay.

Very

good.

Thank

you

very

much.

[Matthias Daniel Reinhart]

You're

welcome.

[Operator]

The

next question

comes

from

Christian

Schmidiger

from

ZKB.

Please

go

ahead.

[Christian Schmidiger, Analyst, Zürcher Kantonalbank]

Hello,

Mr.

Reinhart,

thanks

for

taking

my

questions.

I

would

have

two.

The

first

one

is

regarding

the

UK

market.

You

write

that

you

work

on

further

small

IFA

acquisitions.

Could

you

define

smaller

in-depth

context?

Maybe

in

comparison

to

the

Lumin

Group,

smaller

or

similar

sized?

And

my

second

questions

would

be

regarding

the

management

change

in

2023.

Can

you

already

give

some

visibility

on

whether

you

have

the

intention

to

reduce

your

61%

stake

and

also

increase

the

liquidity

of

the

[ph]



VZ (01:09:49)

share.

[Matthias Daniel Reinhart]

Yes.

Thank

you,

Mr.

Schmidiger.

No.

To

your

last

question,

no,

I

will

not

reduce

my

61%

stake.

I

think

there

is

no

better

investment

than

your

own

company.

That's

number

one,

just

to

keep

that

clear.

And,

of

course,

the

management

change

happens

as

a

–

that's

a

demographic

impact,

reflecting

my

age,

and

that's

normal.

And

I

will –

out

of

the

Chairman

position,

I

will

oversee

the

development,

very

thoroughly,

of

course,

and

need

also

the

strategic

developing

going

forward.

And

we

are

very

happy,

by

the

way,

to

be

able

to

organize

the

succession

planning

internally

in

a

very

positive

way.

And

all

these

changes

are

basically

a

result

of

intense

discussions

amongst

the

two

bodies

of

the

board

and

the

board

of

directors

and

also

the

executive

board,

and

all

individuals

are

basically

standing

behind

that

solution.

And

that

was

for

me

very

important,

right.

That's

to

your

second

question.

Now

to

your

first

question,

UK.

UK

is

if

you

look

into

the

acquisition

methodology

or

strategy

that

we

follow,

we

do

not

envision

larger

acquisitions.

What

happens

in

the

UK

is

that

overall

it's

a

consolidation

phase

that

we

see

over

the

next

coming

years

and

many

small IFAs,

we

are

talking

about

three,

four,

five

people

IFAs.

So

very

small

organizations

are

seeking

a

succession

and

are

seeking

an

integration

into

a

larger

institution

such

as

we

to

represent

one.

And

that's

the

strategy.

And

you

typically

buy

such

a

smaller

organization

at

an

EBIT

multiple

or

EBITDA

multiples.

Well,

the

difference

is

not

really

big

between

EBITDA

and

EBIT

because

they

do

not

have

any

depreciation

on

average.

You

purchase

that

at

a

level

of,

let's

say,

3

– somewhere

between

3,

3.5,

maximum

4.

That's

what

you

pay

for

it.

And

many

consolidators,

typically

private

equity

led

or

consolidators

to

exactly

that

came

by

4 –

an

EBITDA

multiple

of

4

and

sell

the

whole

organization

for

an

EBITDA

multiple

of 12.

That's

their

game,

and

the

whole

thing

is

leveraged.

So,

that's

the

idea,

but

we

don't

have

that

idea.

We

actually

have

a

very

long

term

idea.

We

use

these

small

additions

to

enlarge

our

customer

base

and

grow

out

of

these

customer

bases

with the – on

the

one

side

with

referrals,

but

also

with

getting

new

addresses

for

our

marketing

efforts.

So,

we

try

to

combine

in

the

UK,

our

marketing

experience

that

we

have

out

of

the

Swiss

market

with

the

acquisition

strategy

of

small

and

very

small

IFA.

But

I

cannot

give

you

to

that –

for

example,

this

year,

we

will

maybe

add

two

or

three

smaller

IFA

organizations,

and

we

already

have

–

we

have

a

pipeline

of

quite

a

substantial

number

that

we

could

add,

but

we

have

a

limited

capacity

and

not

only

on

the

fund

side,

but

also

on

the

personnel

side.

And

that's

why

we

have

to

balance

all

these

efforts.

But

it's

very

low

risk

at

the

end

of

the

day.

And

that's

the

nice

thing

behind

it.

[Christian Schmidiger, Analyst, Zürcher Kantonalbank]

Perfect.

Thank

you very

much.

[Operator Instructions]

[Operator]

We

have

a

follow

up

question

from

Mr.

Andreas

Venditti

from

Vontobel.

Please

go

ahead.

[Andreas Venditti, Analyst, Bank Vontobel AG (Research Firm)]

Yes,

thank

you.

I

would

like

to

know

the

interesting

approach

you're

taking

on

the

Lörrach

branch

because

I

think

there's –

there

might

be

other

opportunities,

obviously, if

you

think

about

Geneva

where

you

also

have

quite

a

large

base

of

French-domiciled

people

working

in

Geneva.

Would

there

be

something

that,

let's

say,

if

you're

happy

with

developments

in

Lörrach

would

be

possibly

something

that

you're

looking

at?

Thank

you.

[Matthias Daniel Reinhart]

Yes

and

no.

Lörrach

is

basically

a

very

simple

play

because

we

already

have

in

Germany

the

full

organization

if

you

have

a

bank

and

everything,

and we

are

basically

fully

operational

in

Germany.

That's

why

it's

so

easy

out

of –

working

out

of Lörrach

also

from

a

regulatory

standpoint.

If

you

look

into

the

Geneva

region,

there,

it's

much

more

complicated

because

we

could

do

it. I

mean,

we

could

basically

–

we

could

move

the

license

that

we

have

in

Germany

into

the

France

territory

and

then

start

working

there.

But

I'm

not

really

sure

if

that

is

a

good

idea

at

the

moment.

But

it's

–

we

have

to

think

about

it,

definitely.

And

there

is –

you're

right.

I

mean,

in

Geneva,

you

have,

I

mean,

a

huge

workforce

working

in

– on

the

territory

of

Geneva

but

living

in

France.

That's

right.

I

don't know

if that's

at

least

100,000

overall

in

that

region.

Could

be

an

option,

but

it

takes

much

more

effort

to

do

that.

The

same

thing

is

going

on,

on

the

Italian –

I

mean

in

the

Ticino

region, which

could

be

even

more

attractive

because

the

Milano

region

is

extremely

– itself

is

extremely

attractive.

So,

these

two

regions

we

are

following

very

closely

and

think

about

it.

But

at

the

moment,

I

mean,

it's

basically

quite

a

low

hanging

fruit

in

Lörrach.

That's

what

we

want

to

pick

and

try

to

develop

that

at

the

moment.

[Andreas Venditti, Analyst, Bank Vontobel AG (Research Firm)]

Thank

you.

[Operator]

There

are

no

more

questions,

sir.

[Matthias Daniel Reinhart]

Very

good.

Thanks

a

lot

for

all

the

questions

that

you

have

asked

and

hope

it

was

helpful

for

you

and

wish

you

a

good

day

and

bye-bye.

Thank

you.

[Operator]

Ladies

and

gentlemen,

the

conference

is

now

over.

Thank

you

for

choosing

Chorus

Call

and

thank

you

for

participating

in

the

conference.

You

may

now

disconnect

your

lines.

Goodbye.