Belgian private bank Degroof Petercam, which has a significant presence in Luxembourg, has warned of ongoing uncertainty in financial markets as a result of Russia’s war against Ukraine, which it said “undermines financial markets”.
The bank has announced a strong increase in net profits for 2021 as revenue growth outpaced rising operating costs. The bank also announced that former CEO and head of private banking Bruno Colmant is stepping down after seven years. Sabine Caudron will take over from Colmant as head of private banking.
Assets under management of Degroof Petercam amounted to 86 billion euro last year, up from 75 billion a year earlier due to positive market effects and the inflow of new capital, the bank said.
‘Positive operating leverage’
Net income rose 16.3 percent to 545.7 million euro, while its net profit increased 18.7 percent to 47.6 million euros. Revenues grew faster than operating expenses, resulting in positive operating leverage, the bank’s CEO Hugo Lasat said.
Looking ahead, the bank spoke of “far-reaching geo-political repercussions” of the war in Ukraine. “The conflict undermines financial markets and has consequences for risks and liquidity management in the financial sector,” it said.
“Degroof Petercam is closely monitoring the situation and the impact that the current crisis may have on its activities: the management of portfolios and funds, the liquidity of the portfolios, the interaction and communication with clients as well as the IT infrastructure and the general working environment,” it said in its statement.
Exposure to conflict zones ‘very low’
“Apart from the high market volatility and limited visibility that affect the valuation and performance of securities portfolios, the exposure of the group and its subsidiaries to the conflict zones in question is very low (or zero),” it said.
Addressing its performance in 2021, private banking operating income increased by 13 percent compared to 2020 and accounted for 44 percent of the group’s total revenue. It attributed this to an increase in income from assets, as a result of positive market conditions, higher margins and an increase in loans to customers.
Degroof’s asset management surpassed the 50 billion mark in gross assets under management and achieved operating income 29 percent higher than last year, accounting for 26 percent of total group revenue. This was achieved thanks to continued strong net capital inflows of more than 1 billion euro, improved margins and investor confidence.
Proprietary funds support services income
Operating income from asset services increased 9 percent on last year, accounting for 14 percent of total group revenue. This result was driven by strong growth in proprietary funds and stable volumes of third-party funds, which offset margin declines, while costs were closely monitored and managed.
Investment banking broadly matched the record level of the exceptional year 2020, Degroof said. A decline in revenue from global markets was offset by a 32 percent rise in corporate finance revenues, driven by growth in M&A and capital markets mandates. Investment Banking’s contribution to total group revenue was 16 percent.
Bruno Colmant
DeGroof also announced that its former CEO Bruno Colmant is retiring after seven years. Colmant steered the group through difficult waters especially during the pandemic and had to solve compliance and regulatory challenges. Colmant is known as an academic, strategist and economic thinker.
In an interview last year with Investment Officer Belgium, he described the Covid-19 pandemic as a “gigantic stress test”. He is known for the “personalised” services approach that DeGroof has adopted.
“I am not going to say whether one model is better than another, but I do know that Degroof Petercam has its own model,” he said at the time. “Standardised models I call an ‘asset management’ model. We have a ‘wealth’ model. Degroof Petercam also has other metiers that make our service and offer much broader, such as advisory management, private equity, estate planning, M&A, financial intermediation and so on. The model is completely different, but both can and should co-exist.”
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