- Net commission income increased from EUR 193 million to EUR 194 million
- Net interest income increased significantly from EUR 9 million to EUR 14 million
- Core capital ratio remained stable at well over 20 percent
- Emmerich Müller leaves the Executive Board to join the Supervisory Board
"We recorded sound overall business performance in 2022, a particularly challenging year. The outbreak of war in Ukraine, for example, caused unfathomable human suffering and had far-reaching economic consequences. Moreover, record inflation rate highs and recession fears dominated the capital markets. Against this backdrop, our four business divisions Asset Management, Capital Markets, Corporate Finance and Private Banking developed generally positively and, in some cases, even exceeded our expectations," says Emmerich Müller, Member of the Executive Board at the Frankfurt-based private bank B. Metzler seel. Sohn & Co. Aktiengesellschaft. Net interest income was significantly better than forecast at the beginning of 2022, while net commission income was slightly higher than it was the previous year.
The outlook for 2023 continues to be dominated by geopolitical and economic uncertainties, Müller notes further. Some negative factors from 2022, e.g. the energy crisis in Europe and the zero covid policy in China, had subsided by the end of the year, but global demand is still expected to be weaker than it was last year.
Numerous indicators point to a possible moderate recession in the USA and the euro zone, e.g. the inverted yield curve, more restrictive lending and headwinds on the real estate market. Moreover, problems in the US and European banking sectors were a recurring source of uncertainty. Against this background, new business development in the first months of this year was in line with expectations.
At the beginning of 2023, Metzler made some important decisions aimed to safeguard the bank’s future success. The Executive Board was expanded to include Stefanie Buchmann, formerly Chief Representative, and Franz von Metzler. In addition, as of July 1, 2023, Member of the Executive Board, Gerhard Wiesheu, will become the new Spokesman of the Executive Board. Also as of July 1, 2023, Emmerich Müller will retire from the Executive Board at the age of 67 and join the bank's Supervisory Board, where he will succeed Dr. Christoph Schücking, who is retiring, as Deputy Chairman of the Supervisory Board.
"Emmerich Müller successfully led the bank for almost a quarter of a century as primus inter pares and close confidant of Friedrich von Metzler. During this time, the groundwork was laid to ensure the bank’s future viability and the bank developed extremely well. I would like to mention the strong expansion of private banking activities in particular. On behalf of the Metzler family, I would like to express my sincere thanks for his outstanding and tireless commitment. I am delighted that Emmerich Müller will remain associated with the bank through the Supervisory Board," says Supervisory Board Chairman Wolfgang Kirsch.
"I would also like to express great thanks to Dr. Christoph Schücking for his many years of successful service on the Supervisory Board, the former Shareholders' Committee and the Advisory Board of the bank," Kirsch continued. "Dr. Schücking has advised and accompanied the bank and the family for several decades."
I would like to express my sincere thanks for his outstanding and tireless commitment. I am delighted that Emmerich Müller will remain associated with the bank through the Supervisory Board.
Key figures for fiscal year 2022
Consolidated net income remained unchanged at EUR 2.3 million. Net commission income increased slightly from EUR 193 million to EUR 194 million. Net interest income increased significantly to EUR 14 million from EUR 9 million the previous year.
At EUR 192 million, overall group-wide general administrative expenses were almost 6 percent higher than the previous year (EUR 182 million). Due to general salary increases, personnel expenses for approximately 800 employees totaled EUR 127 million compared to EUR 123 million the previous year. Other administrative expenses amounted to EUR 65 million compared to EUR 59 million the year before. This increase was due mainly to higher costs for information services and investments in the bank's locations.
The group-wide balance sheet total amounted to EUR 8.3 billion compared to EUR 8.8 billion the previous year. Bonds and other fixed-income securities were reduced from EUR 752 million to EUR 460 million in the context of asset liability management. These holdings are generally managed in such a way that they were and are immune to interest rate risks. Thus, write-downs did not play a role. The fiduciary position amounted to EUR 5,257 million in the reporting year compared to EUR 6,294 million the previous year. This position consists almost exclusively of managed pension fund mandates with market values that are subject to fluctuations.
The fund for general banking risks was increased by EUR 10 million year-on-year to EUR 80 million. As in the previous year, the group's reported equity amounted to around EUR 198 million. Overall, the own-fund items disclosed in the consolidated balance sheet amounted to EUR 278 million compared to EUR 268 million the previous year. The Metzler Group's regulatory equity capital continues to significantly exceed the minimum requirements and consists exclusively of core capital. With a core capital ratio of well over 20 percent, Metzler considers itself well equipped to meet existing and future regulatory requirements.
Development of the business areas
As expected, the adverse market conditions of the past year were reflected in the figures for the Asset Management division. Total assets amounted to EUR 69 billion at year-end 2022 compared to EUR 80 billion the previous year due to price declines and the loss of a mandate from a master KVG client. At the same time, we succeeded in generating good inflows in actively managed funds.
Sustainability has played a significant role at Metzler Asset Management GmbH for more than 20 years. In 2022, Asset Management received several awards from independent agencies and institutions for its ESG approach. From UN Principles for Responsible Investment (UN PRI), it received the highest rating of five stars in six categories. In addition, seven funds received the FNG seal's highest award of three stars. Scope rating agency once again recognized Metzler Asset Management as "Best Asset Manager of an ESG Equity Fund".
Despite the difficult environment, Pension Management developed extremely positively. In 2022, following the approval of Metzler Sozialpartner Pensionsfonds AG (MSPF) by the Federal Financial Supervisory Authority (BaFin) the previous year, MSPF, together with the social partners, successfully established the first social partner model approved in Germany.
As of the balance sheet date, Metzler Pension Management managed almost 300 companies (compared to 270 last year) with more than 100,000 pension relationships. This resulted in total investments for the account and risk of employees and employers of more than EUR 11 billion.
In the Capital Markets division, demand for dividend-bearing securities remained high, thus traditional equity brokerage developed very positively in 2022. Fees and commission income were again significantly increased. Here, existing clients were particularly active while new clients were acquired in Germany and abroad. The Research department was also able to increase earnings further in 2022. Additional increases in earnings contributions resulted from continued high demand for company-funded research from many small and medium-sized stock corporations.
The Corporate Solutions department can look back on a very successful year. Corporate Solutions assists companies with IPOs, capital increases, share placements and the issue of bonds and promissory note loans, among other things. In cooperation with Crédit Agricole CIB, the Corporate Solutions department accompanied the IPO of Porsche AG in September of 2022. In addition, it successfully supported Katjes Greenfood in its first bond issue.
The Currency Management department also recorded a milestone this year, winning the first currency hedging mandate for a major Japanese pension fund in cooperation with Metzler Asset Management (Japan) Ltd. The Forex Trading department, which serves internationally active corporate clients and develops flexible collateral solutions for institutional investors, made a significant contribution to the overall result.
The Corporate Finance division acted as exclusive M&A advisor for several transactions in various sectors in 2022. Contrary to the rather restrained overall trend on the M&A market, the past fiscal year was very successful. Among other mandates, the shareholders of the Norderland Group were exclusively advised on the sale of their onshore wind farm portfolio to enercity AG. With an output of 365 megawatts, this represents one of the largest onshore wind farm transactions in Germany to date.
On behalf of the funds advised by Findos Investor GmbH, Metzler Corporate Finance also accompanied the sale of 100% of the shares in Rhenoflex GmbH to the listed company Coats Group plc. from Great Britain. For Coats Group, the merger represented a strategic opportunity to build a global platform. On the buyer side, Corporate Finance advised the Japanese company Daikin Industries Ltd. on the acquisition of Duplomatic MS S.p.A in Italy. Daikin Industries is a leading manufacturer of heat pumps, ventilation and air-conditioning systems, and this transaction represented the next step in the global expansion of its oil hydraulic pumps business. In addition, fund company Copenhagen Infrastructure Partners (CIP) was exclusively advised on the acquisition of a stake in Sunfire GmbH. CIP is one of the world's largest investors in renewable energies infrastructure.
In the Private Banking division, inflows of client funds were positive and in line with expectations. Clients again benefited from an active asset management approach that proved particularly successful last year.. The equity side was less invested in 2022 compared to the global market, and the sector focus was more defensive than it was the previous year.
On the bond side, a short duration helped to greatly limit losses. Clients particularly appreciated the continuity of advice provided by long-standing advisors. The Private Banking division added highly qualified new employees at all locations last year.