Annual Press Conference 2008: Stable growth in difficult conditions
- Commission income rose 10% to EUR 142 million
- No write-downs as a result of the subprime crisis
- Assets under management increased to EUR 33 billion
- Headcount up 7%
“We are proud that Metzler has not had to make any write-downs as a consequence of the subprime crisis,“ said Friedrich von Metzler at the bank’s press conference in Frankfurt/Main, Germany, on May 20, 2008. “Besides, thanks to our business model we always have a sound liquidity position and operate on the money market as a liquidity provider,” he continued. "We are currently observing a renaissance of conventional asset management, with investment criteria such as quality, liquidity and transparency enjoying a comeback.
Friedrich von Metzler reported that 2007 was an extremely successful year. Commission income increased to EUR 142 million, an improvement of 10% on the previous year’s good performance. Net interest income, comprising the balance of interest income, interest expense and current income from securities and investments in affiliates, totalled EUR 18 million in 2007. Net financial income rose to EUR 7 million, up from EUR 4 million in the previous year. The headcount grew from 683 to 732 during the year and Metzler is planning a further increase in 2008. Administrative expenses climbed from EUR 117 million to EUR 135 million. Net expense for risk provisioning, which comprises the difference between additions to reserves in accordance with § 340f of the German Commercial Code and income from securities held in liquidity reserves, was EUR 9 million compared with EUR 4 million in 2006. As in previous years, Metzler systematically utilised scope to build up reserves in keeping with its deliberately conservative valuation principles.
Asset Management increased the volume of assets under management by a further 10% to EUR 33 billion at year-end 2007. The number of master funds and volume of assets invested in them also increased. The total volume of assets administered via the Metzler Fund Xchange service platform rose to EUR 9 billion in the year under review. In the equities sector, concentrating on specialities has proven effective. The bank received a number of awards for mutual funds focusing on European growth stocks and small caps and the managers of these funds. New developments mainly comprised capital-protection strategies based on quantitative models that do not involve forecasts. Our alliances also paid off: the Metzler Japanese Equity Fund, where Metzler cooperates with T&D Asset Management of Japan, performed far better than comparable products last year. This encouraged the establishment of a new fund for Chinese equities in March 2007, which has also gained a place at the forefront of its peer group.
Metzler Pension Management provides demanding solutions for company pension schemes and corresponding time-value accounts programmes. Metzler is one of the leading German providers of such schemes. Its services position it as a single-source supplier of a full range of funded pension and savings products. Well-known clients in this field include the Boston Consulting Group, Bertelsmann, Beiersdorf, Henkel, Royal Bank of Scotland and Pirelli. There is also rising demand for programmes implemented by industry associations. For example, Metzler is involved in programmes for the German Engineering Federation (VDMA) and the German Association of Communication Agencies (GWA).
In Corporate Finance 2007 was dominated by further strong demand for the provision of advice to mid-sized family-run businesses and support for listed German companies and international private equity firms. As an established investment bank with a long track record in this area of the M&A market, Metzler's business curve is far more stable than the large cap segment, where the credit squeeze has been hampering leveraged deals since autumn 2007. The majority of transactions were cross-border and focused on the mechanical engineering, retail, automotive, logistics and real estate sectors. Metzler Corporate Finance acted as consultant to the private equity investor Kohlberg Kravis Robers & Co. in an international auction for the divestment of its shares in Argillon GmbH through Demag Holding to British catalysts producer Johnson Matthey, which is listed on the stock exchange in the UK. Metzler also supported Arcandor, which is included in the M-DAX index, in the successful sale of a majority stake in neckermann.de to the US private equity firm Sun Capital Partners. Other assignments involved assisting the Georg von Holtzbrinck publishing group in the acquisition of a majority interest in the listed company Abacho AG through a public takeover bid and providing support for a capital increase by a listed healthcare company. Another significant area of business is advising family-owned companies. Here Metzler implemented a solution for Intersnack Knabber-Gebäck GmbH & Co. KG to take account of antitrust issues in the acquisition of the Austrian salted snack manufacturer Kelly.
Metzler Corporate Finance has made a good start to 2008 as well as it acted as an advisor in the sale of assets and subsidiaries of the insolvent ISE Group (ISE Innomotive and ISE Industries) to the financial investor Nordwind Capital. A well-stocked project pipeline, including supporting the federal state of North Rhine-Westphalia and NRW.Bank in the planned privatisation of LEG Landesentwickungsgesellschaft Nordrhein-Westfalen GmbH, suggests that 2008 will be another successful year.
Metzler Equities once again reported dynamic growth in its business volume and earnings in 2007. The institutional client base was expanded – mainly by gaining international clients and, as in previous years, the division received a number of awards from independent bodies for the high quality of its equity research. In the latest ranking of top brokers and analysts for German equities prepared by Germany’s Handelsblatt newspaper and the US analysis company Starmine in April 2008 Metzler came fourth overall with a total of six rankings. In the awards presented by the Börsen-Zeitung financial newspaper Metzler Equities was ranked fourth in the category "Best small and mid cap recommendations”.
There was a further increase in large and challenging transactions where Metzler’s extensive capital markets expertise, proven independence and, above all, discretion are central to success. Since it deliberately refrains from own-account trading in equities and participation in consortiums and maintains strict independence in its equity analysis and consulting, Metzler believes it is well-placed to improve its position in this market.
Financial Markets benefited from very stable business with clients in the foreign exchange sector and extremely successful structuring of capital market transactions for clients in close consultation with the Equities division. Metzler continued to expand its client base in the bond and foreign exchange sectors. Important factors in this were its sound knowledge of clients and their specific needs and in some cases long-standing relationships between advisory staff and their clients. In the bond markets Metzler successfully dealt with the challenges arising from the financial markets crisis that started in the summer. Its cautious approach to risk again proved effective in advising clients. The market turbulence also impacted Metzler’s business, mainly because of the lack of liquidity in large parts of the bond market. Nevertheless, the bank’s earnings in 2007 were close to the previous year’s very good level.
Metzler Private Banking continued the thriving development seen in recent years. Assets under management increased significantly, partly due to its good performance and partly due to the inflow of new funds. This upward momentum was supported by all local branches: in Frankfurt am Main, Munich, Stuttgart and Cologne/Düsseldorf. A new branch was opened in Hamburg on January 1, 2008 and has got off to a good start.
Friedrich von Metzler is confident about the future business trend at Metzler Private Banking because it concentrates on providing optimum advice in the interests of its clients rather than on “selling” in-house or third-party products: “We stand for transparency – in investment as well as fees. That is our central success factor and key to our market differentiation.” The positive development in recent years has shown that this business model is very well-accepted by clients and the market.
Metzler Bank generates the majority of its income from business activities geared to the capital markets, which are naturally exposed to fluctuations in financial market trends. Since he is convinced that the bank is well-positioned in high-growth areas of banking, Friedrich von Metzler anticipates that the bank will report a moderate improvement in operating earnings in 2008 despite the difficult business conditions: "Overall, our performance in the first four months is on track.” ”
Press contact:
Jörg-Matthias Butzlaff
Phone (+ 49 69) 21 04 - 49 75
E-mail MButzlaff@metzler.com
Please download Fiscal 2007 here.
