UPDATE 2-Vontobel profit rises as funds division shines

Wed Feb 6, 2013 6:37am EST

Related Topics

* 2012 net new money 8.6 bln francs vs 8.2 bln in 2011

* Net profit 131 mln francs, up 15 percent

* Dividend 1.20 Swiss francs vs 1.10 francs

* Private banking unit lags (Adds management, analyst comment)

By Katharina Bart

ZURICH, Feb 6 (Reuters) - Swiss bank Vontobel Holding said full-year net profit rose 15 percent, as growth from managing stock funds offset investment banking weakness.

Vontobel's earnings show asset management, where pretax profit more than doubled, beginning to contribute far more than the investment bank, where profit slumped 28 percent as trading volumes slid.

The third division, private banking for wealthy clients which Vontobel has long struggled to expand, posted a 14 percent drop in profit.

Vontobel's asset management unit, home to high-profile fund manager Rajiv Jain, attracted 8.2 billion Swiss francs ($9.0 billion) of new money from clients last year, compared with 900 million in private banking.

The bank brought in former Danske Bank operating chief Georg Schubiger to run its private bank last September.

Shortly before his arrival, the bank said it would cut an undisclosed number of jobs to bolster profitability.

Bank Sarasin said Vontobel was relying too heavily on asset management and investment banking.

"We would prefer to see explicit growth in private banking, which is not visible for the time being," Sarasin analyst Rainer Skierka said.

"We feel the bank's valuation is too rich." Skierka rates the stock at reduce.

Vontobel's overall net profit rose to 131 million francs, helped by a lower tax rate and a tight grip on costs.

The bank said it would pay shareholders 1.20 francs per share, up from the 1.10 francs paid out of 2011 earnings.

Vontobel stock was up 3 percent at 1133 GMT, outpacing a 0.5 percent lower European banking index.

The bank said it was well positioned to benefit from an upswing in financial markets, and will "gradually" achieve its 2014 targets.

Those include managed assets of more than 175 billion francs, income of more than 1 billion francs, return on equity of over 10 percent and a cost-to-income ratio of less than 75 percent.

For 2012, assets stood and 150 billion, income at 775 million, ROE of 8.5 percent and a cost ratio of 78.8 percent.

"We want to strengthen our foothold in the Asia-Pacific region in 2013," Vontobel said on Wednesday.

The bank remains open for deals, but would seek them mainly in markets already established, such as Switzerland, Vontobel Chief Executive Zeno Staub told journalists. ($1 = 0.9095 Swiss francs) (Editing by Erica Billingham)

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