03 May 2017
KBL European Private Bankers (KBL epb), headquartered in Luxembourg and operating in 50 cities in Europe, announced today its financial results for the 12-month period ending December 31, 2016. While a difficult year in terms of core operating profitability – due primarily to financial-market volatility – the group nevertheless achieved major progress on its strategic, long-term projects.
Corrected for changes to the scope of the group’s business related to the 2015 divestment of KBL (Switzerland) Ltd and Vitis Life, interest margins declined by 15% in 2016 compared to the previous year. Commission fee income likewise declined by 7.7% due to challenging market conditions for pure-play private banks.
KBL epb reported a group core operating profit, including bond capital gains, of €37.1 million for 2016, while pre-tax profit stood at €16.1 million. Group revenues stood at €465.9 million for the same period.
Private banking assets under management rose by €2.1 billion to €50.8 billion as of December 31, 2016, demonstrating the strength of the group’s core private banking activities across its pan-European footprint. Over the same period, KBL epb made significant progress in refocusing its Institutional & Professional Services business line towards higher value-added services and client segments.
As of December 31, 2016, the group’s Basel III core tier-1 capital ratio stood at 16%, underscoring KBL epb's strong solvency position.
“In 2016, our group made immense strides towards realizing our ambition to become a European private banking leader – supported by the launch of a best-in-class IT platform, strategic acquisitions and growth in assets under management,” said Yves Stein, Group CEO, KBL epb.
“The same period nevertheless proved extremely challenging for us and our sector, as historically low interest rates put pressure on our cash-rich group,” he said. “While we successfully managed operating expenses, profitability also declined due to volatile market conditions, negative investor sentiment and consequently lower transaction levels and reduced fee income.”
Profitability was further impacted by a series of significant investments, including a new IT platform that will greatly enhance client experience and support the streamlining of back-office activities. That platform has now been successfully introduced at the group’s French operations and will be launched very shortly at KBL epb Luxembourg.
Additionally, the group acquired Insinger de Beaufort, the Amsterdam-headquartered private bank, which it intends to merge with Theodoor Gilissen, KBL epb’s wholly owned Dutch private banking unit. Combining the two businesses, Insinger de Beaufort and Theodoor Gilissen will manage over €20 billion in client assets.
Following the acquisition of Insinger de Beaufort – which was finalized on January 1, 2017 – group private banking assets under management rose to €60.5 billion as of that date.
KBL epb also expanded its UK business last year through the acquisition of The Roberts Partnership, a financial planning and wealth management firm with 20 staff and over €500 million in assets under management. That team has now been integrated into Brown Shipley, KBL epb’s wholly owned UK private banking unit.
Consequently, KBL epb is today much more strongly positioned for the future. Indeed, since the start of 2017, the group has already witnessed a return to much more robust organic growth, supported by considerably more favorable market conditions.
“Our business, like that of our peers, is by nature cyclical,” he said. “KBL epb’s long-term mission and vision remain fixed, however, as does our commitment to client satisfaction.”
In recognition of that client-centricity, KBL epb was named the best private bank in Luxembourg in 2016 at the PWM/The Banker Global Private Banking Awards. The group was also recognized among the “Outstanding Private Banks in Europe” at the 2016 Private Banker International Global Wealth Awards.
“Moving forward, with the full support of our shareholder, Precision Capital,” Stein concluded, “we will remain focused on combining deep domestic insight and broader perspective to meet the evolving needs of our HNWI, institutional and professional clients here in the Grand Duchy and across our 50-city European network.”