Degroof Petercam, Belgium’s largest private bank with a significant presence in Luxembourg, on Wednesday posted a double-digit decline in its full year net profit because of one-time costs related to sale of a majority stake to France’s Credit Agricole group and due to higher tax pressure.
Addressing its business performance, the firm said its private banking business improved due to higher interest rates, while its asset management activities faced a decline in revenues.
Degroof posted a 2023 net profit of 56.3 million euro, down 26 percent from 76.4 million it made in 2022. The firm’s underlying performance however improved thanks to better interest margins as a result of higher interest rates. Gross operating income increased 11 percent to 118.5 million euro, while its total net income rose 3.5 percent to 579 million euros.
Degroof said its total client assets increased to 74.3 billion euro from 71.1 billion at the end of 2022.
The Belgian firm last summer announced that it had found a new owner in Paris-based financial group Credit Agricole, whose subsidiary Indosuez agreed to acquire some 80 percent of the shares of Degroof Petercam from several families at a price of 145 euros per share. That gave the transaction a value of 1.55 billion euros.
Indosuez deal completion due mid 2024
In its 2023 earnings announcement, Degroof said it expects this transaction will be completed mid 2024, subject to approval of supervisory authorities in Belgium and France. The European Commission’s antitrust unit already gave its green light before Christmas.
Once the transaction has been completed, existing shareholder CLdN will own 20 percent of the firm.
The alliance between Degroof Petercam and Indosuez Wealth Management, with 135 billion euro in assets under management, aims to create a pan-European leader in wealth management, take advantage of global growth opportunities and position itself as a consolidator in the European market.
“This strong strategic partner - who knows our business inside out - will give the Degroof Petercam brand even more charisma,” said Gilles Samyn, chair of Degroof’s management board, in a statement. “Our agility and entrepreneurship will also be boosted, allowing us to serve our clients’ interests even better.”
Private banking doing better
Elaborating on its 2023 performance, Degroof said the business income from private banking increased compared to 2022 and accounted for 51 percent of the group’s total revenue last year. “This increase is due to the rise in interest margins and higher commissions resulting from the positive development of assets under management,” it said.
The firm did not provide detailed financial performance data per business activity.
Lower revenue for asset management
Institutional asset management ended the year with “slightly lower revenues” compared to last year, it said. These revenues accounted for 21 percent of the total income of the group. This evolution was mainly due to a less favourable product mix, with a larger share of bond solutions than equity solutions, the firm said.
Asset services made a strong contribution to the group and is an important part of the company’s integrated model. The business income from asset services rose by three percent year-over-year and contributed to 14 percent of the total group revenues.
Declines at investment banking, corporate finance
Investment banking ended the year with a slight decline compared to what the firm called an exceptional record year of 2022 and contributed to 14 percent of the total revenues of the group. Corporate finance recorded a slight decrease in buy-side volume in 2023, which was partially offset by an increase in sell-side equity activities. The activity saw a five percent increase in business income compared to 2022, when a record level was recorded in derivative products and incentive plans, Degroof said.
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