Comments on the results of the three largest Liechtenstein banks
Yesterday, Monday, 18 March 2019, LGT was the last of the three major Liechtenstein banks to present its year-end figures for 2018. Overall, the results of the three largest banks, LGT, LLB, and VP Bank, show that the Liechtenstein banking sector remains very well positioned. 2018 was very challenging due to the ongoing low interest rate phase and the price slump on the world's stock exchanges in the last quarter. Nevertheless, all three banks were able to attract net new money. Assets under management reached new all-time highs, partly as a result of acquisitions, and show that Liechtenstein continues to be attractive as an asset management centre. The earnings side varied due to bank-specific priorities. LGT was able to increase its net profit, not least of all thanks to strict cost control, while the net result declined at the other two banks. The main reasons for this were higher costs, because further investments were made to lay cornerstones for future growth.
Overall, however, the results are very positive and confirm that all three banks are taking an active approach to the ongoing transformation in the banking sector. Moreover, the capitalisation of all three banks continues to be above average. This is important for further future investments, and strong capitalisation is also the basis for the security and stability of the Liechtenstein banking sector – two crucial core values of the Roadmap 2020 of the Liechtenstein Bankers Association.
Forecasts are always difficult – but even more so this year due to numerous political uncertainties, in particular the still open outcome of Brexit, the upcoming EU elections, the trade disputes between the United States on the one side and China and Europe on the other, the ongoing global low interest rate phase, and the discussions about equivalence of the Swiss stock exchange.
As an open national economy, Liechtenstein cannot escape these developments. Nevertheless, the LBA is convinced that our banking sector is resilient enough and competitive. We have done our strategic homework. The business model is crisis-tested. There is sufficient capital for targeted growth, even though the cost side remains important. This should allow banks to invest further in digitalisation and to take advantage of opportunities in sustainability.
