Delen Investments Comm. VA

AvH: 78.75%

(€ 1,000) 2014 2015
Gross revenues 278,546 314,094
Net result 80,825 92,417
Shareholders' equity 517,390 582,554
Assets under management 32,866,141 36,884,917
Cost-income ratio (%) 55.0 54.9
Return on equity (%) 16.5 16.8
Core Tier1-capital ratio (%) 27.8 26.0
Personnel 563 641

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Presentation

Management

Delen Private Bank - Brussels

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Delen Investments

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

Delen Investments Comm. VA 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) and in the United Kingdom (JM Finn & Co), had a total of 36,885 million euros under management at year-end 2015.

Information from the 2015 annual report

In 2015, Delen Investments made its way into the Dutch market with the acquisition of Oyens & Van Eeghen, one of the country’s oldest independent financial institutions, with 572 million euros worth of assets under management (as of December 31, 2015) for private clients. 

Financial overview 2015

The assets under management of the Delen Investments group attained a record high of 36,885 million euros at year-end 2015. Both Delen Private Bank and JM Finn & Co and the acquisition of Oyens & Van Eeghen contributed to this 12.2% growth (year-end 2014: 32,866 million euros).

The vigorous growth at Delen Private Bank, where the assets under management increased from 22,808 million euros (2014) to 25,555 million euros (2015), is the result of a positive impact of the increasing value of the client assets under management and of a record 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. The prudent investment strategy and the dynamic, long-term oriented management model continue to prove their added value.

The UK asset manager JM Finn & Co (Delen Investments 74%) also reported an increase in assets under management, from 10,058 million euros (7,834 million £) at year-end 2014 to 10,758 million euros (7,929 million £) at year-end 2015. This growth is explained by the positive trend in the value of the client portfolios and the appreciation of the pound sterling against the euro.

As of December 31, 2015, the assets under management at Oyens & Van Eeghen are consolidated by Delen Investments. They consist on that date of 572 million euros worth of assets under management for private clients and foundations. Oyens & Van Eeghen will only start contributing to the consolidated results of Delen Investments in 2016. Oyens & Van Eeghen also manages 680 million euros for local authorities under fixed-term mandates. Its fiduciary activities comprise 1.8 billion euros worth of assets under management, mainly for institutional clients.

The gross revenues of the Delen Investments group increased to 314.1 million euros, in which the share of JM Finn & Co amounted to 81.0 million euros. Compared to the previous financial year, the group’s gross revenues increased by 12.8% (14.8% excluding JM Finn & Co), primarily due to the higher level of assets under management. The operating costs increased by 12.5% (12.4% excluding JM Finn & Co). At Delen Private Bank, the increased costs connected with the constant developments in IT, the recruitment of staff, and the organization of client events is a direct result of the growing activity. At year-end 2015, the group had 641 employees (FTE), of whom 308 at Delen Private Bank, 310 at JM Finn & Co, and 23 at Oyens & Van Eeghen. The constant investment in own buildings and in-house IT development also led to higher depreciation costs. At JM Finn & Co, the increase in costs in local currency terms is limited and the result of the recruitment of staff in the audit departments and higher depreciation costs due to refurbishment works at the London offices. The cost-income ratio remained highly competitive at 54.9% (only 42.6% for Delen Private Bank, 86.1% for JM Finn & Co) and in line with the previous year (55.0%). The net profit increased in 2015 to 92.4 million euros (compared with 80.8 million euros in 2014). The contribution of JM Finn & Co to the net result of the group was 5.5 million euros (after depreciation of the activated client base and 26% minority interests of 2.2 million euros, contribution 2014: 6.4 million euros).

 Tabel Vermogen UK

The consolidated equity of Delen Investments stood at 582.6 million euros as at December 31, 2015 (compared with 517.4 million euros as at December 31, 2014), and already takes into account the option of the JM Finn & Co management to sell the remaining shares (valued at 39.6 million euros) to the Delen Investments group in the future. The group’s Core Tier1 capital (taking into account the intangible assets of 246.9 million euros, of which 51.6 million euros is from clients of JM Finn & Co and 7 million euros from clients of Oyens & Van Eeghen) amounted to 284.9 million euros at the year-end (compared with 237.9 million euros at year-end 2014). The Delen Investments group is more than adequately capitalized and amply satisfies the Basel II and Basel III criteria with respect to equity. The Core Tier1 capital ratio of 26.0% 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 high-quality short-term commercial paper from blue-chip companies, or in short-term deposits with highly respected banks. 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 16.8%.

Operational overview 2015

In 2015, 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 difficult environment, with interest on government securities in euros fluctuating around the zero mark, the bank recorded very satisfactory results and always kept the risks limited, especially if they gave insufficient return. At JM Finn & Co, the client portfolios, with on average a greater weight of shares, evolved favourably despite the difficult market conditions in the Anglo-Saxon countries.

In 2015, Delen Private Bank invested its clients’ assets in highly diversified portfolio shares, with the emphasis on Europe. The maturity of bonds was shortened further (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, but is gradually being reduced. During the year, Delen Private Bank diminished its exposure to shares from emerging markets and reoriented the Chinese shares from manufacturing to consumption. The bank remains underweight in energy and commodity shares. Due to the high valuation, exposure to the USA was relatively low compared with other regions. 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. For the purpose of better diversification, investing in strong currencies outside the euro zone has been the policy for several years now. That position is now gradually being reduced. In 2015, Delen Private Bank recorded a very satisfactory performance in a volatile environment, although it was unable to take full advantage of certain opportunities such as the strong performance of long-term bonds of riskier issuers. Delen Private Bank, however, stands by its philosophy of prudent investment and is confident that this approach will continue to make the difference in the long term. JM Finn & Co, which because of a greater exposure to Anglo-Saxon shares needed the skills of its asset managers to record a positive result in volatile markets, also firmly believes in the benefits of further diversification and gaining greater knowledge of bond markets in order to cater to clients with lower risk profiles.

Delen Private Bank

In 2015, 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 2015, 74% (19,025 million euros) of the assets entrusted to Delen Private Bank were being managed through direct discretionary management or through its own financial BEVEKs (open-ended investment trusts). This now represents more than 20,000 management mandates. 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 in order to receive and serve its clients even better. In 2015, major refurbishments were carried out in Luxembourg and Hasselt. The refurbished office in Liège is due to open in 2016. More investments are planned in West Flanders and Antwerp.

Through its offices, Bank J.Van Breda & C° again contributed substantially to the result of Delen Private Bank. At December 31, 2015, Delen Private Bank was managing 4,236 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° (750 million euros). Bank J.Van Breda & C° thus represents approximately 19.5% of the total assets managed by Delen Private Bank.

JM Finn & Co

The acquisition of 73.49% of the London-based asset manager JM Finn & Co Ltd in 2011 was an important step for the Delen Investments group. At year-end 2015, JM Finn & Co had 10,758 million euros (7,929 million £) assets under management, of which 66% under discretionary management. The increase in assets under management and in the share of discretionary management in relation to year-end 2014 confirms JM Finn & Co is 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.

2015 was another busy year for JM Finn & Co in operational terms: implementing the new software system, 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 receiving clients more often at the branch office. JM Finn & Co continues to invest in the expansion of its commercial organization and the start up of asset planning services. The executive committee of JM Finn & Co continues to ensure that the strategic initiatives and priorities are steadily implemented with success, so that JM Finn & Co can carry on developing into a more efficient and modern asset manager, without impairing the relationship of trust between asset managers and clients. Delen Investments fully supports JM Finn & Co in the challenge of coupling a successful growth strategy with the necessary profit improvement.

Oyens & Van Eeghen

In the summer of 2015, Delen Private Bank reached an agreement with the shareholders and management of Oyens & Van Eeghen on the acquisition of all the shares of one of the Netherlands’ oldest independent financial institutions. The transaction was approved in December by the regulatory authorities in the Netherlands and Belgium. In this way, Delen Private Bank strengthens its position in the Benelux area. 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. At year-end 2015, Oyens & Van Eeghen had 572 million euros worth of assets under management for private clients, of which 93% under discretionary management. Oyens & Van Eeghen also manages 680 million euros for local authorities under fixed-term mandates. Its fiduciary activities comprise another 1.8 billion euros worth of assets under management, mainly for institutional clients. The position of Oyens & Van Eeghen is a high-quality platform on which to develop the Delen model in the Dutch onshore asset management market.

In operational terms, 2016 will bring many developments for Oyens & Van Eeghen. Several ad hoc teams made up of staff from Delen Private Bank and Oyens & Van Eeghen will ensure that the expertise and systems which Delen Private Bank developed in Belgium can also be deployed in the Netherlands. By broadening its range of services based on Delen’s efficient organization, Oyens & Van Eeghen will 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. Delen Investments fully supports the management and staff of Oyens & Van Eeghen in this challenge of implementing a successful growth strategy.

Outlook 2016

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. The new employees who joined in 2015 to support the growth will contribute to these efforts. Delen Private Bank enters 2016 with caution, as low commodity prices will continue to frustrate the emerging markets, as will the tightened monetary policy in the USA. The bank will endeavour to make the most of these 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 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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