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Management

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Delen Investments

Beneficial interest AvH: 78.75%
AvH Contact: Jan Suykens
www.delen.be

Delen Investments CVA specializes in asset management and general financial advice for a wide range of private clients. The Delen Investments group, which has grown into a well-established name in Belgium (Delen Private Bank), the Netherlands (Oyens & Van Eeghen) and the United Kingdom (JM Finn & Co), had a total of 37,770 million euros under management at yearend 2016.

Information from the 2016 annual report

Financial overview 2016

The assets under management of the Delen Investments group attained a record high of 37,770 million euros at year-end 2016 (36,885 million euros at year-end 2015).

The vigorous growth at Delen Private Bank, where the assets under management increased from 25,555 million euros (2015) to 27,383 million euros (2016), is the result of a positive impact of the increasing value of the assets and of a strong organic net growth in terms of both existing and new private clients. The constant inflow of assets, to which all Belgian branches contribute, testifies to the confidence that clients have in Delen Private Bank, and confirms its prominent position in discretionary asset management in Belgium. In the first half of the year, the inflow of assets had decreased slightly in relation to the record level of 2015 due to difficult market conditions, but in the second half of 2016 the inflow had fully recovered. The prudent investment strategy continues to prove its added value. In 2016, Delen Private Bank realized better returns for its clients than the industry average (with similar risk profile).

At the UK asset manager JM Finn & Co (Delen Investments 80.1%), the assets under management decreased from 10,758 million euros (7,929 million £) at year-end 2015 to 9,730 million euros (8,331 million £) at year-end 2016. This decrease is a result of a limited net outflow, but mainly due to the exchange rate development of the pound sterling against the euro (-13.9%, -1,520 million euros), which is only partly offset by the positive evolution of the value of the client portfolios (in GBP).

At December 31, 2016, the assets under management for private clients and foundations at Oyens & Van Eeghen amounted to 657 million euros (572 million euros at year-end 2015).

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The gross revenues of the Delen Investments group decreased in 2016, despite the acquisition of Oyens & Van Eeghen, to 313.1 million euros, in which the share of JM Finn & Co and Oyens & Van Eeghen amounted to 81.0 million euros. This decrease is primarily due to the decrease in variable fees in volatile market conditions, the impact of the exchange rate (GBP) on the consolidation of the revenues of JM Finn & Co, and low market interest rates. The operating costs increased by 5.8% (8.2% excluding JM Finn & Co and Oyens & Van Eeghen). At Delen Private Bank, the increased costs connected with the constant developments in IT, the recruitment of staff, the temporary rental of offices in Antwerp, and the organization of client events are a direct result of the growing activity. At JM Finn & Co, the increase in costs in local currency terms is limited and the result of higher personnel costs (connected with the recruitment of extra staff) and increased expenditure on marketing and IT. The cost-income ratio remained highly competitive at 57.8% (only 46.3% for Delen Private Bank, 85.8% for JM Finn & Co, and 96.8% for Oyens & Van Eeghen). This ratio decreased slightly compared to 2015 (54.9%) since the investments and higher expenditure do not immediately generate an increase in income. At year-end 2016, the group had 657 employees (FTE), of whom 335 at Delen Private Bank, 296 at JM Finn & Co, and 26 at Oyens & Van Eeghen.

The net profit decreased in 2016 to 87.9 million euros (compared with 92.4 million euros in 2015). The contribution of JM Finn & Co to the net result of the group was 5.6 million euros (after depreciation of the activated client base and 19% minority interests of 2.5 million euros; contribution in 2015: 5.5 million euros). The contribution of Oyens & Van Eeghen to the net result of the group was 0.1 million euros (after depreciation of the activated client base of 0.1 million euros).

The consolidated equity of Delen Investments stood at 621.2 million euros as at December 31, 2016 (compared with 582.6 million euros as at December 31, 2015). It already takes into account the option of the JM Finn & Co management to sell the remaining shares (valued at 25.0 million euros) to the Delen Investments group in the future. The group’s Core Tier1 capital (taking into account the intangible assets of 241.0 million euros, of which 50.7 million euros from clients of JM Finn & Co and 7.2 million euros from clients of Oyens & Van Eeghen) amounted to 377.3 million euros at the year-end (compared with 284.9 million euros at year-end 2015). The Delen Investments group is more than adequately capitalized and amply satisfies the Basel III criteria with respect to equity. The Core Tier1 capital ratio of 30.9% is well above the industry average and takes into account the long-term commitment to buy out minority shareholders in JM Finn & Co. Delen Investments has a sound and easily understood balance sheet. Cash and cash equivalents continue to be invested conservatively with the National Bank of Belgium, in high-quality government bonds (no PIIGS exposure), in short-term deposits with highly respected banks or in high-quality short-term commercial paper from blue-chip companies. The impact of the Basel III requirements is limited for Delen Investments, as its capital consists exclusively of Core Tier1 capital, its portfolio is invested conservatively, and the group’s ratios already exceed the present and future requirements by a comfortable margin. The return on (average) equity was a highly satisfactory 14.6%.

Operational overview 2016

Delen Private Bank

In 2016, Delen Private Bank applied its traditional investment principles to let the assets of its clients, within the limits of their risk profile, benefit from the opportunities in the markets. In a context of far-reaching political changes, increasing interest rates and poor performance of the European stock markets, Delen Private Bank recorded very satisfactory results and always kept the risks limited.

In 2016, Delen Private Bank continued with its strategy of optimizing the quality and efficiency of its asset management by, as before, striving for an ever bigger share of management mandates. At year-end 2016, 76% (20,728 million euros) of the assets entrusted to Delen Private Bank were being managed through direct discretionary management or through its own financial BEVEKs (openended investment trusts). In terms of number of accounts, the share of management accounts is 90%. This now represents more than 22,000 management mandates. Delen Private Bank invested its clients’ assets in widely diversified share portfolios, with the emphasis on Europe. The maturity of bonds was kept short (less than one year) to hedge against the risk of rising interest rates. As far as currencies are concerned, the wide diversification outside the euro zone was maintained and even slightly increased in the last quarter. For the bonds part of the portfolios, Delen Private Bank continued to opt primarily for short-term investments in solid countries and businesses, but with a more dynamic contribution through investments in perpetual bonds. This policy bore fruit in 2016, with all asset classes contributing to the result.

Delen Private Bank continues, even in a prominent position, to gain market share in the Belgian private banking market as a result in part of the strong growth in new private assets. The development of the local establishment of the bank is bearing fruit, with more than three quarters of net capital inflows coming through the branches, rather than through the head office in Antwerp and in Luxembourg. This encourages Delen Private Bank to carry on investing in staff and infrastructure. The renovated branch in Liège opened in 2016. The Antwerp staff moved to a temporary location in order that extension and renovation works at the head office can begin in 2017. More investments are planned in West Flanders, as well as in Leuven and Namur where Delen Private Bank will open new branches. Extensions are planned in Brussels and Ghent.

Through its branches, Bank J.Van Breda & C° again contributed substantially to the result of Delen Private Bank. At December 31, 2016, Delen Private Bank was managing 4,737 million euros for clients introduced through the network of Bank J.Van Breda & C°. In addition, Delen Private Bank takes care of the securities administration for Bank J.Van Breda & C° (865 million euros). Bank J.Van Breda & C° thus represents approximately 20.1% of the total assets managed by Delen Private Bank.

 

JM Finn & Co

At JM Finn & Co, the client portfolios, with on average a greater weighting in shares, evolved in a very positive way. After a volatile period in the run-up to the Brexit poll, the London stock market resolutely opted for an upward trend. The weakening of the pound sterling also generated an additional contribution of foreign shares. Thanks to the skills of its asset managers and the strong markets in the United Kingdom, JM Finn & Co was able to achieve good results for its clients in 2016.

The acquisition of 73.49% of the London-based asset manager JM Finn & Co in 2011 was an important step for the Delen Investments group. In 2016, Delen Investments bought 6.52% from the minority shareholders in order to increase its direct shareholding to 80.1%. At year-end 2016, JM Finn & Co had 9,730 million euros (8,331 million £) assets under management, of which 71% under discretionary management. The increase in assets under management and in the share of discretionary management confirms JM Finn & Co as a healthy firm with growth potential. JM Finn & Co’s position in the UK onshore asset management market, combined with the skill and experience of Delen Private Bank, should enable JM Finn & Co to continue expanding and to become a prominent player in the British asset management market.

2016 was another busy year for JM Finn & Co in operational terms: harmonizing the pricing policy, taking important initiatives to meet the tightened compliance environment, improving the efficiency of the organization, and further developing the partnership with Delen Private Bank. Emphasis is also on further increasing commercial activity by rolling out the new asset planning activity and the implementation of new CRM software. The executive committee of JM Finn & Co continues to ensure that the strategic initiatives and priorities are steadily implemented with success, in order that the successful growth strategy can be coupled with the necessary profit improvement.

 

Oyens & Van Eeghen

In 2015, Delen Private Bank acquired all the shares of Oyens & Van Eeghen, one of the Netherlands’ oldest independent financial institutions, founded in 1797. In this way, Delen Private Bank strengthened its position in the Benelux area. At year-end 2016, Oyens & Van Eeghen had 657 million euros worth of assets under management for private clients, of which 94% under discretionary management. Oyens & Van Eeghen also manages 667 million euros for local authorities under fixedterm mandates. Over the past few years, Oyens & Van Eeghen has increasingly and successfully focused on the segment of specialized asset management and fiduciary advice for private clients and institutional parties. Oyens & Van Eeghen provides a high-quality platform on which to develop the Delen model in the Dutch onshore asset management market.

Oyens & Van Eeghen started the year with an overweighting of shares and a consequently greater exposure to the more difficult markets in the first quarter. The recovery opened the way to good results, even prompting an increase in the proportion of shares at the year-end. The strategy of buying shares in cyclical industries which are relatively undervalued after a difficult period also made a positive contribution to the investment result. The bonds part of the portfolios has maturities that are somewhat longer than at Delen Private Bank, but are still short. Coupled with an effective selection of credit risk, the short maturities made a satisfactory contribution to the bond portfolios.

In operational terms, 2016 was a busy year with important developments. Several teams of staff ensured that the expertise, particularly in the field of BEVEKs, and the IT systems which Delen Private Bank developed in Belgium can also be deployed in the Netherlands. In 2017 this will result in a substantial improvement in terms of service and efficiency in the Netherlands. Oyens & Van Eeghen will thus be able to serve a larger clientele from its branch offices in Amsterdam and Den Bosch. There are also plans to recruit talented commercial staff to support and accelerate growth. To this end, four additional commercial staff members were hired in 2016.

Outlook 2017

Delen Private Bank stands by its philosophy of prudent investment and is confident that this approach will continue to make the difference in the long term. Delen Private Bank (Belgium, Luxembourg and Switzerland), JM Finn & Co (United Kingdom) and Oyens & Van Eeghen (the Netherlands) will continue to dedicate their efforts to attract new capital, with a focus on regions where their brand recognition is on the rise. Delen Private Bank enters 2017 with a healthy dose of cautious optimism. Delen Private Bank will endeavour to make the most of the new market conditions and to keep track of developments in order to ensure the long-term protection and profitability of its clients’ assets.

Along with the successful implementation of the strategic initiatives to strengthen the JM Finn & Co model and the further integration of Oyens & Van Eeghen in the group, the Delen Investments group will also continue to assess external growth opportunities. The group is convinced that its business model, which is developing at a steady pace in Belgium, can also be applied in other markets where the group has a presence.

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