- Strong portfolio, fund and mandate returns
- Increase of total clients assets (net) : 18% up to 74.7 billion euros
- Record net inflow of 2.1 billion euros into the DPAM entity
- Increase of total revenues to 480.6 million euros
- Gross operating profit: 84.4 million euros
- Net result down sharply due to non-recurring items
- Capital ratio (CET1): 19.5%, well in excess of regulatory requirements
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Bruno Colmant, CEO of Degroof Petercam : « Our performance in 2019 was moderate, with a number of ups and downs. We have generated solid returns for our clients, our activities improved overall and institutional management set a new record in capital inflows during the year. Our investment expertise has been recognized by our clients and by the industry, as confirmed by numerous awards. However, the year was marked by significant regulatory remediation costs, IT investments and goodwill write-downs.
Our teams have shown and continue to show exemplary resilience and responsiveness in the face of the health crisis linked to Covid-19. In the first half of 2020, the high volatility of the markets led to a significant decrease in the value of assets under management. However, it is too early to quantify the impact for the year 2020. However, even in the event of a significant negative impact on its 2020 results, the group’s consolidated shareholders equity is sufficiently ample to overcome this ordeal. The group is extremely well capitalized, has a balance sheet total of more than 8 billion euros, of which 5 billion euros of highly liquid assets.
On behalf of the members of the Board of Directors and the Management Committee, I would like to sincerely thank our teams for their commitment and our clients for their trust and loyalty.»
New non-executive director: Gaëtan Waucquez
The general meeting also approved the appointment of Gaëtan Waucquez as non-executive director, subject to the approval of the supervisory authorities.
Gaëtan Waucquez holds a Law Degree (UCL), a Degree in Supplementary Studies of Business Administration (VUB), and a Post-Graduate in Management (SOLVAY-CEPAC). Gaëtan Waucquez also attended an International Executive Program at INSEAD. Between 1994 and 2000, Gaëtan Waucquez held various executive financial functions within the UCB group in Belgium and the United States. Gaëtan Waucquez then joined in 2000 the FLORIDIENNE group, a company listed on Euronext Brussels. After having created the Life Science division, he became Chief Financial Officer of FLORIDIENNE in 2002. He became Chief Executive Officer in 2007 and Managing Director in 2015.
The General Meeting also took note of the resignation of Benoît Daenen and Alain Schockert as Directors with effect from the end of the General Meeting.
Ludwig Criel, Chairman of the Board of Directors of Degroof Petercam:
«Together with all the directors, I would like to thank Benoît Daenen for his commitment and achievements in Degroof Petercam's private banking business and for his contribution to the work of the Board. On behalf of the members of the Board of Directors and the employees of Degroof Petercam, I would also like to express our deep gratitude to Alain Schockert for his almost five decades of dedication to our company as head of corporate finance and director of the bank in Belgium and Luxembourg. We also welcome Gaëtan Waucquez. We are delighted to be able to count on his expertise. He also knows our company well from his time as a non-executive member of the Board of directors of Bank Degroof from 2007 to 2015.»
1. Commercial activities
Against a backdrop of falling interest rates, the results better reflect the performance of the fee-generating businesses. While the various entities of the Degroof Petercam Group were able to take advantage of the rise in the stock markets, it was mainly asset management for institutional clients and Asset Services that were the driving forces in 2019.
- Private Banking
For its part, focusing part of its energy and resources on meeting the regulatory requirements for compliance with anti-money laundering regulations, Private Banking recorded slightly negative net flows but a largely positive market effect. As at 31 December 2019, private banking clients' assets under management totaled 38.4 billion euros compared with 34.2 billion euros in 2018, an increase of 12.3%.
- Degroof Petercam Asset Management
The Degroof Petercam Asset Management (DPAM) entity dedicated to the management of funds and mandates for major institutional accounts and the distribution of in-house funds recorded a record level of net asset inflows. Gross assets under management rose from 31.7 billion euros at the end of last year to 39.2 billion euros at the end of 2019. This amount reflects a market increase as well as a net inflow of 2.1 billion euros.
In addition, DPAM successfully continued its international expansion, with nearly 70% of net capital inflows coming from abroad.
- Investment Banking
With the exception of brokerage income generated by the dealing desk, which grew strongly in 2019, other income from investment banking activities is slightly down on the previous record year. With 90 assignments carried out during the year in mergers and acquisitions, capital markets transactions and advisory services, the investment banking team continues to position itself as a leader in investment banking services, particularly for medium-sized companies.
- Asset Services
As of December 31, 2019, fund administration services accounted for 40.5 billion euros of assets under administration, including 8.5 billion euros for mutual funds for third party clients, an increase of 15.8 % in funds under administration compared to last year.
Strong management performance
Both the model portfolios and the Global Strategy flagship funds have recorded above-average performance over 1, 3 and 5 years.
On the institutional management side (DPAM), the funds have consistently posted excellent long-term returns. Last year, DPAM was awarded the 'Super Award' by the Belgian financial daily L'Echo/De Tijd for the best asset manager in equities and bonds over the past five years.
Total client assets: 74.7 billion euros
In 2019, all activities combined, total customer assets grew significantly by more than 18% to 74.7 billion euros compared to 63.2 billion euros a year earlier. These are net amounts, after elimination of double counting between the group's various activities, namely: management and credit services, administrative services and custody services.
2. Financial Results
At the end of 2019, total revenues amounted to 480.6 million euros compared to 454.8 million euros in 2018, an increase of 5.6%.
The context of negative interest rates in Europe continued to weigh on interest margin revenues. It should be noted, however, that Degroof Petercam is becoming less dependent on interest rate income that is mainly influenced by external factors.
Overall, net fee income across all business lines was up slightly from the prior year.
Gross operating result amounted to 84.4 million euros at 31 December 2019, a decrease of 24.5% compared to last year. After taxes and exceptional items, the consolidated net result showed a profit of 20.2 million euros.
This sharp decline compared with a year earlier can be explained, on the one hand, by the substantial increase in operating expenses linked to a sharp rise in technology transformation costs and costs incurred in regulatory remediation, which was only partially offset by revenue growth( in particular a moderate increase in the overall level of fees and commissions), and, on the other hand, by the exceptional level of asset write-downs (mainly at the level of foreign banking activities).
At balance sheet level, at 31 December 2019, the regulatory capital ratio (CET1) stood at 19.5% compared with 16.8% a year earlier, and the LCR liquidity ratio stood at 308%, well above the minimum ratios imposed by the regulator.
The balance sheet total amounted to more than 8 billion euros, of which 5 billion euros of highly liquid assets. Degroof Petercam remains an extremely well-capitalized bank with significant liquidity, which is the consequence of the conservative policy in the management of the group, its balance sheet and its activities.