Presentation

Delen Investments Comm. VA

AvH: 78.75%

(€ 1,000) 2017 2016
Gross revenues 366,912 313,071
Net result 105,836 87,877
Shareholders' equity 679,684 621,722
Assets under management 40,544,926 37,769,779
Cost-income ratio (%) 53.7 57.8
Return on equity (%) 16.3 14.6
Core Tier1-capital ratio (%) 29.3 30.9
Personnel 676 657

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Management

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Delen Private Bank

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

Delen Private Bank specializes in asset management and general financial advice for a wide range of private clients. The 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), had a total of 40,545 million euros under management at year-end 2017.

Information from the 2017 annual report

Financial overview 2017

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 assets under management of Delen Private Bank attained on a consolidated level a record high of 40,545 million euros at year-end 2017 (37,770 million euros at year-end 2016).

The strong growth at Delen Private Bank, where the assets under management increased from 27,383 million euros (2016) to 29,410 million euros (2017), is the result of a positive impact of the increasing value of the assets and of a record high organic net growth, from both existing and new private clients. All Belgian branches contributed to this constant net inflow of assets. This testifies to the confidence that clients have in Delen Private Bank, and confirms its prominent position in discretionary asset management in Belgium. There was a strong inflow of assets throughout 2017, and almost exclusively in discretionary asset management. As a result, the share of assets under discretionary mandates at Delen Private Bank increased from 76% (year-end 2016) to 81% (yearend 2017). The prudent investment strategy continues to prove its added value. In 2017, Delen Private Bank realized better returns for its clients than the industry average (with similar risk profile).

The UK asset manager JM Finn (Delen Private Bank 81.0%) reported an increase in assets under management from 9,730 million euros (8,331 million £) at year-end 2016 to 10,475 million euros (9,294 million £) at year-end 2017. This increase is explained by a positive impact of the increasing value of the assets (expressed in GBP) and a net inflow of assets. This favourable development was diluted by the exchange rate development of pound sterling against the euro (-3.5%).

Delen 1-en

At December 31, 2017, the assets under management for private clients and foundations at Oyens & Van Eeghen amounted to 660 million euros (657 million euros at year-end 2016).

The gross revenues of the Delen Private Bank group increased by 17.2% in 2017 to 366.9 million euros, in which the share of JM Finn and Oyens & Van Eeghen amounted to 82.7 million euros. This increase is primarily attributable to the higher level of assets under management. The operating costs increased by 7.7% (11.4% excluding JM Finn and Oyens & Van Eeghen). The increased costs at Delen Private Bank connected with the constant developments in IT and the recruitment of commercial staff are a direct result of the growing activity. At JM Finn, the increase in costs in local currency terms is the result of higher labour costs and increased expenditure on marketing and IT. The cost-income ratio decreased to a highly competitive 53.7% (only 42.5% for Delen Private Bank, 83.7% for JM Finn). This ratio improved significantly in relation to 2016 (57.8%) as the increased income gave rise less than proportionally to an increase in costs. At year-end 2017, the group had 676 employees (FTE), of whom 360 at Delen Private Bank, 298 at JM Finn, and 18 at Oyens & Van Eeghen.

The net profit increased in 2017 to 105.8 million euros (compared with 87.9 million euros in 2016). The contribution of JM Finn to the net result of the group was 7.1 million euros (after depreciation of the client base and 19% minority interests of 2.7 million euros; 2016: 5.6 million euros). The contribution of Oyens & Van Eeghen to the net result of the group was slightly negative due to restructuring costs and the scaling down of services to institutional investors.

The consolidated equity of Delen Private Bank stood at 678.8 million euros as at December 31, 2017 (compared with 621.2 million euros at year-end 2016). This amount already takes into account the option of the JM Finn management to sell the remaining shares (valued at 27.5 million euros) to the Delen Private Bank group in the future. The group’s Core Tier1 capital (taking into account the intangible assets of 238.3 million euros, of which 49.8 million euros from clients of JM Finn and 7.1 million euros from clients of Oyens & Van Eeghen) amounted to 368.4 million euros at year-end (compared with 377.3 million euros at year-end 2016). The Delen Private Bank group is more than adequately capitalized and amply satisfies the Basel III criteria with respect to equity. The Core Tier1 capital ratio of 29.3% is well above the industry average and takes into account the long-term commitment to buy out minority shareholders in JM Finn. Delen Private Bank has a sound and easily understood balance sheet. 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 Private Bank, 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 16.3%.

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 2017

Delen Private Bank (B, Lux, CH)

In 2017, 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 a good economic situation and good performance of the stock markets worldwide, low inflation in developed countries and a strong European currency, Delen Private Bank recorded very satisfactory results and always kept the risks limited.

In 2017, 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 2017, 81% (23,704 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). In terms of number of accounts, the share of management accounts is 92%. This now represents more than 24,600 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 diversification outside the eurozone resulted in a negative contribution. 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 2017, with all asset classes contributing to the result.

Delen Private Bank continues 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. This encourages Delen Private Bank to carry on investing in staff and infrastructure. In 2017, branches were opened in Namur, Leuven and in the Kempen area, while the branches in West Flanders were extended. The Antwerp staff moved to a temporary location in order that extension and renovation works at the head office can begin. More investments are planned in Leuven. Delen Private Bank will open a new branch in Knokke, and 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, 2017, Delen Private Bank was managing 5,474 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° (1,023 million euros). Bank J.Van Breda & C° thus represents approximately 22% of the total assets managed by Delen Private Bank.

 

JM Finn (UK)

At JM Finn, 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 in 2016, the London stock market resolutely opted for an upward trend, which continued in 2017. The weakening of 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 was able to achieve good results for its clients in 2017.

The acquisition of 73.49% of the London-based asset manager JM Finn in 2011 was an important step for the Delen Private Bank group. In 2016 and 2017, Delen Private Bank bought 7.5% from the minority shareholders in order to increase its direct shareholding to 81.0%. At year-end 2017, JM Finn had 10,475 million euros (9,294 million £) assets under management, of which 74% under discretionary management. The increase in assets under management and in the share of discretionary management confirms JM Finn as a healthy firm with growth potential. JM Finn’s position in the UK onshore asset management market, combined with the passion and experience of Delen Private Bank, should enable JM Finn to continue expanding and to become a prominent player in the English asset management market.

2017 was another busy year for JM Finn in operational terms. This was driven by a strong interaction with its clients at its branches or at events, important initiatives to meet the tightened MiFID II compliance environment, efficiency improvement of the organization, and further development of the partnership with Delen Private Bank. Emphasis is also on increasing commercial activity by rolling out the new asset planning activity and the implementation of new CRM software. The executive committee of JM Finn 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, established in 1797. In this way, Delen Private Bank strengthened its position in the Benelux area. At year-end 2017, Oyens & Van Eeghen had 660 million euros worth of assets under management for private clients, of which 87% under discretionary management. 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 foundations. 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 also benefited from the recovery of economic growth and the stimulating effect of monetary policy on the stock markets. 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 short maturities like at Delen Private Bank. Coupled with an effective selection of credit risk, the short maturities made a satisfactory contribution to the bond portfolios. Thanks to consultation with the management team of Delen Private Bank and the transfer of consolidated responsibility for bond investments to staff of Oyens & Van Eeghen, the investment strategies in the Netherlands and Belgium continue to converge.

In operational terms, 2017 was a year with important developments for Oyens & Van Eeghen. The new management took over in 2017, and by the end of the year the services to large institutional clients were scaled down. The team in charge of this activity left in order to carry it on elsewhere. The expertise, particularly in the field of BEVEKs, and the IT systems which Delen Private Bank developed in Belgium contribute very substantially towards an improvement in terms of service and efficiency in the Netherlands. Oyens & Van Eeghen is thus able to serve a larger private clientele from its branch offices in Amsterdam and Den Bosch. Oyens & Van Eeghen also continues to search for talented commercial staff to support and accelerate growth.

Outlook 2018

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 (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 2018 with a healthy dose of cautious optimism in view of the favourable economic outlook. Nevertheless, the high stock valuation levels give grounds for caution, as the markets are vulnerable to rising interest rates and geopolitical tensions. 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.

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