Referring to a “challenging year”, Belgian investment house Degroof Petercam on Saturday said that its operating income fell 16 per cent last year on the back of a decline in commission income. The drop was mitigated in part by higher interest margins.
The bank, which has a major presence in Luxembourg as asset manager, posted 106.7 million euro in operating income for 2022, down from 126.6 million a year earlier. The privately held company did not provide a breakdown of this income.
Total client assets declined 17 per cent to 71 billion euro from 86 billion in 2021. Supported by higher interest rates and lower operating costs, the firm’s net profit rose to 76.4 million euro, up 61 per cent from 47.6 million in 2021.
‘Headwinds’
“Financial markets were confronted with a valuation reset in 2022 in a context of the Ukrainian war and energy crisis,” said CEO Hugo Lasat in a statement.“Degroof Petercam, and the industry in which we operate, went through a challenging year. Despite these headwinds, our business lines generated solid results. 2022 can be considered a positive year due to our resilient business model and the new interest rate environment.”
Degroof said its total revenue increased 2.4 percent to 559 million euro, with private banking accounting for 46 per cent of the total; institutional asset management for 24 per cent; investment banking for 16 per cent; and asset services for 14 per cent.
Looking ahead, Degroof said it has adopted a three-year strategy titled “Route 26”. This roadmap will serve as a guide for all its business initiatives. “It leverages on the scalability of the business model and on potential external growth trends, such as alternative investment assets, developments in IT and digital and the sustainable transition,” said the firm.
Targets for 2026
In an interview with Belgian business daily De Tijd conducted before the results were released at 7 am on Saturday, Lasat said Degroof wants to double its net profit within three years. For 2026, the bank targets 93 billion euro in total client assets and a net profit of 155 million euro.
“We should reach that figure without acquisitions,” Lasat said. ‘But thanks to our commercial dynamism and increased operational efficiency. The major investments in the new banking IT system are behind us.”
The launch of a new IT platform in Belgium, which took two years to prepare, was a major milestone in Belgium in 2022. This “Core Banking” platform is designed to support the newly defined growth ambitions. “Our new future-proof IT environment will allow us to pursue our scalability strategy for our business, facilitate the adoption of technological innovations and support our growth ambitions,” said Lasat.
‘Surprising’
Degroof Petercam, created out of a 2015 merger between two Belgian investment banks, made headlines in recent weeks after news agency Reuters first reported that a major financial institution was in discussions with some of its shareholders about acquiring their stakes. The company then issued a statement saying that it has appointed an investment bank to investigate how such changes could best benefit the firm.
Degroof is majority owned by a group of Belgian shareholders, including Guimard Finance, CLdN Finance, and Belgium’s Philippson, Siaens, Schockert, Haegelsteen, Peterbroeck and Van Campenhout families. Together they control more than 72 percent of the firm, while a group of unidentified “financial partners” owns about 22 percent.
Speaking with De Tijd, Lasat did not want to say much about the upcoming changes. “Some shareholders want to strengthen, others just don’t. This is nothing unusual in a company. But the attention this is getting is surprising,” Lasat said.
Reuters last week reported that Belgian state-owned bank Belfius, which aims to expand in investment banking, wants to increase its stake in Degroof Petercam. Firms like Dutch bank ING, France’s Credit Agricole and Royal Bank of Canada have also been mentioned in this context. Spokespeople at ING and Belfius have told Investment Officer they do not comment on rumors.
Degroof has scheduled its annual shareholders meeting for 23 May.