Release Date: August 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Van Lanschot Kempen NV (FRA:VA3, Financial) reported a strong net profit increase of 44% to EUR74.5 million for the first half of 2024.
- The company achieved a significant growth in assets under management, adding EUR5.7 billion from new and existing clients, reaching nearly EUR140 billion.
- All client segments, including Private Banking Netherlands, Belgium, Investment Management, and Investment Banking, were profitable, demonstrating a well-rounded performance.
- The company maintained a robust capital ratio, well above its target, and plans to return excess capital to shareholders by year-end 2024.
- Van Lanschot Kempen NV (FRA:VA3) is on track with its non-financial targets, including a significant reduction in carbon intensity of its discretionary assets under management.
Negative Points
- Operating expenses rose by 6%, leading to a cost/income ratio of 69%, which, while demonstrating scalable growth, indicates rising costs.
- Interest income was lower compared to the previous year, although it remained stable compared to the second half of 2023.
- The company faces challenges in maintaining margins, particularly in the Private Clients Netherlands segment, where margins decreased from 60 to 55 basis points.
- There is uncertainty regarding the sustainability of net inflows, particularly in the Netherlands, where tax effects and client behavior could impact future inflows.
- The integration of recent acquisitions, such as Robeco and Accuro, requires careful management to ensure successful integration and realization of expected benefits.
Q & A Highlights
Q: Could you explain the high commission income in private banking and whether there were any one-off factors?
A: Maarten Edixhoven, Chairman of the Management Board, stated that the commission income increase was regular, with no exceptional factors. The only change was the inclusion of Robeco, which lowered the margin for Private Clients Netherlands.
Q: What caused the strong net inflow in private banking, and can we expect similar inflows in the second half of the year?
A: Jeroen Kroes, CFO, explained that last year's low inflows in H2 were due to a shift from investments to savings, influenced by tax regulations. This effect might recur, but the underlying momentum remains strong, especially in Belgium.
Q: Is the strong inflow in Belgium sustainable, or was it influenced by the Robeco acquisition?
A: Maarten Edixhoven noted that the strong inflow in Belgium is due to gaining market share and not solely linked to the Robeco acquisition. The momentum is expected to continue due to their strong market presence and client relationships.
Q: How will the expected ECB rate cuts affect your NII guidance for H2 2024 and 2025?
A: Jeroen Kroes stated that they have factored in ECB rate cuts and expect to maintain stable NII levels due to term deposits moving with market rates and stable margins on their loan and treasury books.
Q: Can you comment on the potential for margin expansion in Private Clients Netherlands?
A: Jeroen Kroes mentioned that while they don't set targets for discretionary versus advisory splits, new initiatives in discretionary products could lead to margin expansion.
Q: How does the transfer of ownership in family-owned businesses in the Netherlands impact your business?
A: Maarten Edixhoven highlighted that liquidity events from family-owned businesses are a growth source, as they often lead to increased assets under management and deepen client relationships.
Q: What is the focus of your M&A strategy, and how are you managing current integrations?
A: Jeroen Kroes stated that they are focused on integrating Robeco and Accuro, with room for bolt-on M&A. The focus remains on geographies where they are already present.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
