Zuger Kantonalbank : Interim Report 2023 (EN)

Interim Report 2023

Strong result for the first half of 2023

Zuger Kantonalbank continued successfully along its growth trajectory in the first six months of 2023. At CHF 62.7 million*, consolidated profit was up 19.9% year on year, with the positive development of interest operations in particular making a key contribution to this pleasing result. The bank secured further significant growth in customer deposits and assets under management.

Zuger Kantonalbank can look back on a successful first six months of 2023. Implementation of the #gemeinsamvorwärts 2025 corporate strategy is on track. Some of the strategic initiatives have already fed through to the income statement, thus preparing the way for the bank's continued successful development. Higher business volumes at all levels made headcount expansion necessary. Despite these expanded capacities, Zuger Kantonalbank has an excellent cost- income ratio. Following the full acquisition of Immofonds Asset Management AG (IFAM)

in July 2022, Zuger Kantonalbank is issuing its first-ever Interim Report at Group level.

Very good result from interest operations Interest operations developed very encouragingly in the first six months of 2023. As early as autumn last year, Zuger Kantonalbank was one of the first banks in Switzerland

to increase the rate of interest paid on credit balances. The substantial inflow of customer deposits continued in the first half of this year. Coupled with the expansion of credit volumes and with targeted measures in asset and liability management as well as with regard to interest rate risks, this led to a

very pleasing net result from interest opera- tions: the result improved by 30.1% year on year to CHF 99.8 million. The low rate of loan defaults reflects the bank's prudent lending policy. Value adjustments for default risks and losses from interest operations have thus been kept at a low level for a number of years. In keeping with the princi-

ple of prudence, Zuger Kantonalbank has increased value adjustments for inherent default risks to take account of the increased credit volumes.

Challenging environment for investment business

Given the ongoing difficulties in the geopolitical situation in Europe, there was no let-

up in the uncertainties making themselves felt in the markets of relevance for both customers and the bank. The result was a volatile stock market environment with lower trading volumes and constrained income growth in securities and investment business. Brokerage income that was down on the prior-year period contrasted with a positive trend in mandate business. Despite this mixed picture, Zuger Kantonalbank is in a position to substantially expand volumes in investment and

* All amounts in the report are stated in Swiss francs (CHF) unless otherwise noted.

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asset management business. At CHF 1.1 bil- lion, the net new money inflow into assets under management is very gratifying. Assets under management thus increased to CHF 18.1 billion as at 30 June 2023, and the result from commission business and services was 14.5% higher year on year at CHF 38.6 million. Commission income from asset management business was marginally lower. This dip can be offset thanks to the consolidation of IFAM.

Increased income from trading activities The Swiss franc's higher interest rate differentials versus the other major currencies and the larger volume of currency transactions contributed to the very good result recorded in trading activities. Zuger Kantonalbank increased its income from these activities by 36.2% year on year to CHF 9.8 million.

Excellent cost-income ratio

Operating expenses were 18.5% higher

than in the first half of 2022; in the 2022 financial statements, the dissolution of the employer-sponsored foundation reduced personnel expenses by a one-time amount of CHF 3.8 million. Through a targeted expansion of the headcount, Zuger Kantonalbank

is ensuring that its exacting standards and requirements in tailored and personal client care are maintained and can be developed further. New jobs are also being created in processing, risk management and in the supporting units: Zuger Kantonalbank continually seeks to satisfy the very highest standards in terms of service quality and security. Personnel expenses were up by

CHF 41.0 million. This corresponds to an increase of 23.3%, adjusted for the prior-yearone-time effect of 10.8%. General and administrative expenses in the first half of 2023 amounted to CHF 22.0 million (+11.8%).

The cost-income ratio was reduced to a very good 41.6% despite this increase in general and administrative expenses.

Higher level of depreciation and amortisation The need for depreciation and amortisation increased with the write-downof the goodwill from the acquisition of IFAM over five years and the investments in the branch network. The modernisation of all branches in the network will be completed in the first quarter of 2024. Depreciation and amortisation amounted to CHF 13.8% in the first half of 2023, CHF 7.1 million higher than in the prior-yearperiod. CHF 5.7 million of this amount can be attributed to the write- down of the IFAM goodwill. At CHF 0.1 mil- lion, operational losses remained at a

very low level, as in previous years.

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Consolidated balance sheet

in CHF 1,000 (rounded)

Assets Liquid assets

Amounts due from banks Amounts due from customers Mortgage loans

Trading portfolio assets

Positive replacement values of derivative financial instruments Financial investments

Accrued income and prepaid expenses Non-consolidated participations Tangible fixed assets

Intangible assets Other assets Total assets

Total subordinated claims

Liabilities

Amounts due to banks

Liabilities from securities financing transactions Amounts due in respect of customer deposits

Negative replacement values of derivative financial instrumentsMedium-term notes

Bond issues and central mortgage institution loans Accrued expenses and deferred income

Other liabilities Provisions

Reserves for general banking risks Share capital

Capital reserve

Retained earnings reserve Own shares Six-month/12-month profit, Group Total liabilities

Off-balance-sheet transactions Contingent liabilities Irrevocable commitments

Liabilities for calls on shares and other equities

30.06.2023		31.12.2022		Change

4,019,574		3,396,642		18.3 %
80,996		28,793		181.3 %
904,347		804,289		12.4 %
13,800,590		13,474,644		2.4 %
118		155		-23.8 %
3,366		4,679		-28.1 %
668,594		669,804		-0.2 %
9,960		6,983		42.6 %
21,906		21,589		1.5 %
123,024		122,092		0.8 %
49,781		56,074		-11.2 %
25,676		28,721		-10.6 %
19,707,932		18,614,464		5.9 %
4,553		4,801		-5.2 %
209,225		517,773			-59.6 %
50,000
13,870,913		12,595,757			10.1 %
5,931		13,184		-55.0 %
13,619		9,873		37.9 %
3,990,000		3,920,000		1.8 %
67,744		64,726		4.7 %
63,513		55,525		14.4 %
5,035		4,638		8.6 %
790,682		790,682
144,144		144,144
90,500		90,232		0.3 %
347,924		315,064			10.4 %
-3,988		-4,316		-7.6 %
62,690		97,183		-35.5 %
19,707,932		18,614,464		5.9 %
133,069		158,607			-16.1 %
592,548		620,574		-4.5 %
24,268		24,268

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Consolidated income statement

in CHF 1,000 (rounded)

Interest and discount income

Interest and dividend income from financial investments Interest expense

Gross result from interest operations

Changes in value adjustments for default risks and losses from interest operations

Net result from interest operations

Commissions from securities and investment transactions Commission income from lending activities Commission income from other services

Commission expense

Result from commission business and services

Result from trading activities

Income from participations

• of which from participations accounted for using the equity method
• of which from other non-consolidated participations Result from real estate
  Other ordinary income
  Other result from ordinary activities

Operating income

Personnel expenses

General and administrative expenses Compensation for government guarantee Operating expenses

Value adjustments on participations and depreciation and amortisation of tangible fixed assets and intangible assets

Changes to provisions and other value adjustments, and losses

Operating result

Extraordinary income

Taxes

Six-month profit, Group

30.06.2023

148,192

1,807

-46,797

103,202

-3,408

99,794

25,302

2,170

16,074

-4,919

38,627

9,775

1,136

1,136

1,838

483

3,458

151,654

-40,977

-21,986

-1,589

-64,553

-13,786

-111

73,205

89

-10,603

62,690

30.06.2022

79,288

1,131

-3,444

76,975

-263

76,713

27,203

1,794

7,776

-3,040

33,734

7,178

1,039

57

982

1,842

502

3,383

121,007

-33,232

-19,668

-1,589

-54,490

-6,660

-48

59,808

23

-7,545

52,287

Change

86.9 %

59.8 %

>1000 % 34.1 %

>1000 %

30.1 %

-7.0 %

21.0 %

106.7 %

61.8 % 14.5 %

36.2 %

9.4 %

-100.0 %

15.7 %

-0.2 %

-3.7 % 2.2 %

25.3 %

23.3 %

11.8 %

18.5 % 107.0 %

129.4 %

22.4 %

283.8 %

40.5 %

19.9 %

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