First half profits fall 30% at GAM Holding despite asset rise
Semi-annual net profits at Swiss group GAM Holding fell 30% year on year to CHF 70.2m, even though the Zurich-based asset manager was able to reverse net outflows it suffered late last year into almost CHF1bn of new business in the first half.
Earnings per share fell 26% year on year, from CHF 0.54 to CHF 0.40.
A decrease in the group’s average asset base and growth in low margin assets led net fees and commission income to drop 14%, to CHF 245.0m.
Group-wide assets grew 4% from the end of last year, helped by investment gains of CHF 2.9b, CHF 300m worth of positive currency movements, with the strengthening of the US dollar and sterling versus the Swiss franc counteracting depreciation of the euro.
New business of CHF 900m also helped, and partially turned around the net outflows of CHF 4.4bn the group suffered during the second half of 2011.
Chairman and CEO Johannes de Gier said: “This set of numbers validates our diversification strategy. It demonstrates that we have the ability to capture client flows even in an environment where demand is thin and focused on specific, narrow areas.
“Looking forward to the remainder of 2012, unless market conditions were to improve dramatically, we expect uncertainty to persist and to continue to impact client behaviour. This in turn will make demand for investment strategies and asset classes erratic and difficult to predict.
“Cost management is and will remain a priority for us. However, we will strive to achieve the right balance between calibrating costs to market conditions and maintaining the stability our businesses need to thrive.”
Swiss & Global said its private label funds business, and active fixed income strategies managed at GAM were responsible for much of the inflows.
GAM suffered CHF 1bn of net outflows overall, even despite the strong flows into its fixed income range – particularly absolute return, emerging market and catastrophe bond strategies. By the end of June it had assets of CHF 45.4bn, up 1% this year.
GAM lost money, however, as its private banking channels continued to move discretionary portfolio mandates in-house, GAM Holding said, “in line with common trends in the industry”.
Swiss & Global took in CHF 3.5b of net new money in the first half, an annualised growth rate of 9%, to leave it with CHF 82.6bn.
It was boosted by taking over the servicing of various funds for private label partner the Royal Bank of Canada (Suisse) S.A., and expanding business with some existing clients.