Half-yearly results − Bank Frick offsets rising costs with healthy growth

Interest income rose by 17% to CHF 9 million. One of the factors driving this increase was the strategic expansion of the working capital financing business, where margins are higher than in mortgage lending. Bank Frick focuses on offering working capital financing together with its partner company Masterpayment AG.

Bank Frick cut the interest costs to CHF 2 million, which represents a reduction of 14.8%. The Bank was able to increase the interest margins and is less dependent on refinancing. One of the reasons for this was the long-term high-yield certificates which expired during the reporting period.

In the commission and service operations business, Bank Frick generated a net income of CHF 3.9 million (+2.9%). Earnings fell by CHF 0.9 million. This is the result of, among others, the expiry of credit models previously offered in the UK. Bank Frick was also able to significantly cut costs by CHF 1 million, meaning that net income was slightly higher than in the comparative period.

Considerable potential in the area of financial operations

Profit from financial operations fell by half to CHF 0.8 million. The result from the first half of 2016 should essentially be viewed as a unique success, which was mainly driven by the then turbulence on the currency markets (i.e. Brexit). In addition, the financial profit for the first half of 2017 contained one-time expenses in the area of negative value adjustments on financial investments, which also impacted profits. “In principle, however, we believe there to be considerable potential in the area of financial operations,” says Bank Frick CEO Edi Wögerer.

Despite significant investments, general administrative expenses were only 2.8% higher at CHF 8.7 million. This rise was caused by additional costs for personnel and non-personnel expenses.

Growth drivers: e-business, funds and issues

“In summary, it can be said that the traditional business areas are tending to stagnate somewhat,” Mr. Wögerer explains. “Our growth is being driven by e-business as well as our funds and issues business.”

Other operating income amounted to CHF 0.7 million, which is in line with expectations. The extremely good result from the first half of 2016 was caused by two extraordinary items: the disposal of shares in Visa Europe and the sale of the working capital financing company Masterpayment AG to Net 1 UEPS Technologies, Inc. (Net1).

No provisions were made for general banking risks in the first half of 2017.

Expiry of LDF leads to expected asset outflows

The balance sheet total of Bank Frick amounts to CHF 990 million. This represents a decrease of 9.2% compared to the end of 2016. This decline is largely due to asset outflows in relation to the Liechtenstein Disclosure Facility (LDF) with the UK. The LDF allowed persons who are liable to tax in the UK to legalise untaxed assets via Liechtenstein at favourable conditions. The program expired at the end of 2015.

Over the last six months, Bank Frick expanded the mortgage lending to CHF 108 million (+22%). “This has allowed us to diversify our business into less risky areas in line with our strategy,” explains Edi Wögerer.

Net1 acquires stake in Bank Frick

Bank Frick is continuing to focus its strategy on digitalised business models, which it is developing for and with third-party companies (fintechs).

Bank Frick entered into a close strategic partnership with Net1 in 2016. At the end of January, the Bank announced that the successful cooperation between Net1 and Bank Frick has now led to the international provider of payment systems acquiring a stake in Bank Frick. The Liechtenstein Financial Market Authority’s qualifying holdings procedure has not yet been completed and approval is yet to be granted.

First cryptocurrency certificate

In the second quarter, Bank Frick developed the first cryptocurrency certificate and launched it at the end of June. This is a private placement. With this certificate, Bank Frick was testing all its internal processes and the stability of our interfaces under real conditions. “Now we are able to give qualified investors the opportunity to participate in the performance of cryptocurrencies in an extremely simple way,” Edi Wögerer explains.

Founder of Bank Frick passes away

On 27 June 2017, Kuno Frick Sr passed away at the age of 78. The founder of Bank Frick had become weak following a major operation and was unable to fight off a serious infection. “From a young company with just four employees in 1998 grew a healthy bank with 78 staff, who continue to further develop the work started by Kuno Frick Sr in the way he would have wanted,” CEO Edi Wögerer says, “thinking entrepreneurially, acting creatively and always being open to new ideas.”

Low-risk and sustainable business relationships

“For more than two years now, we have been focusing on lower-risk business relationships. We have identified existing risks and are working in a targeted manner to reduce them,” Edi Wögerer states. This applies in particular to the private-client business. In order to minimise risk, there is also a clearer focus on core markets and core clients. “The various financial products and our e-business models require specific technical know-how. We have this in-house, which helps us accurately qualify and quantify the intrinsic risks,” Mr. Wögerer adds.

Forgoing opportunistic gains

In the credit card acquiring and issuing business (MasterCard and Visa), Bank Frick only works with partners that have sustainable business models, which helps the bank to reduce risk in this area also.

Bank Frick will forgo – supposedly – opportunistic financial gains in order to strategically minimise the long-term risks and further build upon the Bank’s reputation among its stakeholders.

“In light of our performance to date and the expected figures for the second half of the year, we and our employees are approaching the second half of 2017 with real confidence,” says CEO Edi Wögerer in conclusion.

About Bank Frick

Bank Frick is a family-run Liechtenstein bank with headquarters in Balzers. It was founded in 1998 by Kuno Frick Sr and is currently wholly controlled by the Kuno Frick Family Foundation.

The Bank focuses on private clients, business clients and fund clients, who are supported by specialised departments at Bank Frick.

Bank Frick is the only bank in Liechtenstein with acquiring licences from Visa and MasterCard. 

Bank Frick develops tailor-made funds for qualified market players and acts as a custodian bank.

In 2016, the roughly 70 employees generated a profit of CHF 3.2 million and assets under management in the amount of CHF 2.5 billion. As at the end of December 2016, the balance sheet total was CHF 1.1 billion. The capial base stood at CHF 85 million.

Bank Frick operates a branch in London.