110.2 million losses for Quintet

The highlight of the 2021 financial year, which weighs heavily in Quintet’s accounts with a loss of 110.2 million, is the end of Quintet Switzerland. The fate of the former Bank am Bellevue is also sealed. The establishment which employed 87 people will be liquidated.

In the end, Quintet’s Swiss adventure will have cost the bank just over 70 million euros, according to Nicholas Harvey, group CFO of Quintet Private Bank. Or 20 million in 2020 and 50 million for the 2021 financial year. An adventure which, without the pandemic, would not have ended, insists the CFO. But faced with these high fixed costs and a profitability that will not have been there, the decision was made to direct Quintet’s growth investments elsewhere. “A difficult decision.”

For Nicholas Harvey, in addition to the Swiss business, the 2021 financial year will above all have been marked by continuous commercial development – ​​“and therefore a demonstration of the relevance of our value proposition”.

Business Development

The numbers point in that direction. Over one year, total revenue increased by 3% to 460.8 million euros with net commission income up 11% to 348 million. The loan portfolio reached 4.5 billion (+25%) and total client assets amounted to 96.6 billion (+14%), “the highest level for 10 years”.

Expenses remain stable at 504.6 million.

The expenses include the investments resulting from the five-year development plan initiated in 2019 by the bank. Or 50 million for the year. This plan provided for the merger of the European banks within the same entity and major investments in IT, with in particular a modernization of the banking platform, the financing of the group’s geographic expansion and a wave of recruitment of profiles mainly commercial. Over the financial year, the Quintet group also recruited 350 people, including 100 private bankers. For as many departures. The idea is to find the right balance between sales and support functions, with sales representatives in the field and support functions concentrated in the Grand Duchy.

When we launched our five-year development plan, it was clear from the start that we were headed for several loss-making years.

Nicholas Harvey, Group Chief Financial Officer, Quintet Private Bank

“When we launched our five-year development plan, it was clear from the start that we were heading for several loss-making exercises,” recalls Nicholas Harvey, who indicates that operational balance should be regained in 2022. If things remain in l state, particularly on the geopolitical front.

The shareholder, Precision Capital, seems not to doubt it. He injected, in 2021, 60 million fresh money into the bank. This brings the total capital contributed to Quintet to 350 million since the takeover in 2012. As a reminder, the last profit recorded by the bank dates back to 2018. A profit of 0.8 million, a very sharp decline compared to 35.2 million in 2017. In 2019, the loss was 43.7 million.

This capital injection enables Quintet to present a Basel III core capital ratio (CET1) of 18% and a liquidity coverage ratio (LCR) of 138.5% at the end of the financial year. “Ratios well above regulatory thresholds.”

For 2022, Nicholas Harvey expects continued growth in the bank’s income and control of expenses despite continued investment.

Nordic and climate ambitions

However, Switzerland has not slowed down the desire for geographic expansion. Quintet has just increased its workforce in England after having recruited a team of 15 people and will accelerate its development in the Nordic countries by playing on the dynamics and the experience acquired in Denmark. Unlike the Swiss market attacked with a bank, Quintet will now favor the branch format when entering a new market, which has the advantage of requiring less fixed costs. Commercial activities will be done “more than ever” locally, with growing support from teams from Luxembourg – “a hub model”. Without giving a timetable, Nicholas Harvey mentions projects in Sweden and Finland.

The bank also intends to pursue its commitment to sustainable investment. Responsible assets under management reached 11.7 billion euros at the end of last year – an increase of almost 100% compared to 5.9 billion euros at the end of 2020. “This growth was fostered by a series of partnerships aimed at bringing innovative investment solutions to clients and helping to mitigate the impact of climate change. This trend continued in the first quarter of this year, as the bank launched Quintet Earth – the world’s first climate-neutral multi-asset fund – and then partnered with the Royal Mint in the UK to launch the ‘use of recycled gold in a product traded on the stock exchange,’ recalls Nicholas Harvey.

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