The continued positive performance at Valiant in the interest business and strong net trading income drove consolidated profit up 7.8% year on year to CHF 99.7 million. Operating income climbed by 23.3% to CHF 406.7 million. The operating result rose a hefty 51.2% to CHF 169.3 million. Implementation of the strategy is going well: geographic expansion is on track and the programme to increase profitability is moving ahead as planned.
“I am delighted to be able to report strong quarterly results once again. We further increased our operating result in the third quarter. We take this as affirmation to continue to forge ahead with a vigorous implementation of our strategy,” said Valiant CEO Ewald Burgener.
Successful interest business
Valiant increased the gross result from interest operations by 22.8% year on year to CHF 318.1 million. The net interest income stood at CHF 302.6 million, up 21.4% on the previous year. This was affected by both the increase in the base rate by the Swiss National Bank to its current level of 1.75%, and the impact of the multiple hikes to interest rates on the Valiant range of savings and retirement products.
Higher income in the commission business and services
Commission income from securities trading and investment activities was up 3.0% year on year to CHF 37.7 million. A change to accounting practices in the payment card business and adjustments to various commission saw Valiant grow the result from commission business and services by a total of 11.9% to CHF 61.6 million.
Result from trading activities and other ordinary income
The result from the trading business doubled to CHF 30.4 million, as a consequence of higher income from forward foreign exchange contracts. Other ordinary income rose 16.9% year on year, primarily due to income from holdings.
Operating expenses and allocation to reserves for general banking risks
Operating expenses climbed by 9.1% to CHF 220.8 million. The increase was the result of investments in digitalisation, expansion and Valiant’s attractiveness as an employer. A one-off CHF 10.0 million contribution to the staff pension fund and a total pay rise of 2.6% helped to make the bank a more attractive employer. Sustainability is very important at Valiant. In line with its steadily increasing significance, investments in this area have also been stepped up. Given the positive performance of the operating result, CHF 40.0 million were allocated to the reserves for general banking risks in the first nine months of the year. This further strengthened Valiant’s equity capital and raised its capital ratio to 16.0%, which is well above regulatory requirements.
Clients loans and amounts due to clients
At the end of the third quarter client loans amounted to CHF 29.4 billion, up 2.7%. The growth target of 3% per year has thus been almost achieved already.
Valiant continues to ensure it has long-term funding. The three pillars of this strategy are amounts due to clients, central mortgage institution loans and covered bonds. In the third quarter Valiant recorded inflows of new deposits from both private and corporate customers. In total, clients entrusted Valiant with CHF 725.2 million in new deposits during the first nine months. In response to the changed interest rate environment, Valiant is strategically reducing short-term fixed investments by professional counterparties. Overall, this resulted in a decrease in amounts to due clients of 0.3%.
Programme to increase profitability on track
With its programme to increase profitability, Valiant aims to reduce costs by roughly CHF 12-15 million annually from 2024. In order to achieve this, cost-cutting and optimisation measures are being implemented in all divisions across the entire bank. A total of 43 of the planned 50 full-time-equivalent positions have been cut since the launch of the programme, and CHF 11 million will be saved by the end of 2023. The measures are being implemented on a continuous basis and their financial effect will be fully felt from the 2024 financial year onwards.
Geographic expansion soon to be completed
As part of the geographic expansion from Lake Geneva to Lake Constance Valiant is opening an additional 14 branches between 2020 and 2024. The bank is close to achieving this goal, with 13 new locations. The final branch in this strategic period, in Muttenz, will come into operation in early December 2023. The planned growth in headcount by 170 full-time equivalents, 140 of them in client advisory services, will take place by 2024.
Valiant expects consolidated profit to be higher in the current year.
Key balance sheet figures
|30/09/2023 in CHF millions||31/12/2022 in CHD millions||Change as %|
- of which mortgage loans
|Amounts due to clients||22,486||22,552||-0.3|
Key income statement figures
|30/09/2023 in CHF thousands||30/09/2022 in CHF thousands||Change as %|
|Gross result from interest operations||318,118||259,058||22.8|
|Result from commission business and services||61,628||55,085||11.9|
|Result from trading activities||30,442||15,225||99.9|
|Other ordinary income||11,991||10,256||16.9|