Ladies and gentlemen, welcome to the BCV 2022 full year results conference call and live webcast. I'm Alice, the conference call operator. I would like to remind you that all participants will be listen only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star 1 on your telephone. Webcast viewers may submit their questions in writing via the relative field. For operator assistance, please press star 0. The conference must not be recorded for publication or broadcast. For the call today, the speakers will refer to the slides, which are available for viewing on the IR section of the BCV website since this morning. At this time, it's my pleasure to hand over to Pascal Kiener, CEO. Please go ahead, sir. Thank you very much. Good afternoon and good morning for some of you calling from the U.S. Let me jump directly on page 4 with the key messages. I think you certainly re-read already our communication. Revenues are up, net profit up 3%. That was not exactly expected. If you remember what we communicated in August, we were thinking that we would land a bit slightly below 2021. Actually, we are slightly above the record profit of 2021. A very good year. We are quite pleased. Therefore, we are in a position to increase the dividend for this year. Since we are quite also confident in the future of the bank, we have decided to carry on our distribution policy and with a higher distribution range going forward for the next 5 years. Page 5, we're going to comment those numbers. Page 6, very quickly. Mortgage business up 4%. This correspond more or less to the market, which is growing between 3.8, 4.2. We don't know exactly because we don't have the market figure yet, but I guess we are in line here with the market. Other loans stable, but I will come back on that later on. There are different effects here on the other loans, basically commercial loans. Deposits are slightly up. You have to combine the two parts of this chart, sight deposit and other client deposits. I will also make a couple of comments on that. Net new money is positive and AUM are going down due to market performance. Okay. Some new people, a new person in the board of directors for the audit and risk committee, a new Chair. He will join us in on July 1st, 2023. As already communicated, Gérard Haeberli, the Head of Private Banking, left the bank at the end of 2022 and was replaced by Christian Steinmann coming from Credit Suisse. In charge in the bank as of 1st of November, but in charge of the division as of 1st of December 2022. Some highlights, as you know, we entered some index. We obtained a certification for our asset management business. For those of you who followed BCV for a couple of years, you know that we put a lot of emphasis, strategic emphasis on customer service, customer satisfaction. Here in, four years in a row, with an independent survey, we are the most recommended bank involved. We are very solid financial ratings. Those are stable, no change. Also very solid, very good no-notes, grades about extra financial ESG ratings. You see MSCI, Ethos, which is a Swiss organization and the Carbon Disclosure Project. I think we have always a very good grade, very often the second grade out of a range of six or eight, you know. Coming on business, retail banking is a stable business, slightly growing with the GDP here in Switzerland or in this part of Switzerland. Customer deposits still growing a bit lower growth than last year. This is basically due to the post-COVID period. People started again in 2020 to travel, to consume, et cetera. A bit less deposits. On the mortgage, as I said, 4% we are in the market. You see that also in increase in revenues and operating profits. A very good year for our retail banking activities. Corporate banking, this is why I said, we have to look at the different business lines in this division. SMEs, a very good year again. 2% increase in credit volume. This is more or less the GDP. The COVID-19 bridge loan has been repaid up to 50% right now. This is a reduction of CHF 150 million. Those loans were issued during the COVID period, and this is good that customer are able to amortize or to repay part of this loan. Deposits are also up, showing that the SMEs in this part of Switzerland are in good shape. Real estate mortgage up 10%. I mean, the real estate market is still dynamic, so this is not a big surprise. Deposits slightly down. I mean, this is kind of a volatility, nothing really to mention here. The same for large corporate. Here, as you know, we focus really on profitability, risk-adjusted profitability, and we don't care really about volume. There is an inherent volatility in this business, depending on the condition we are suggesting to our clients and/or what the competition is doing. Trade finance may be a more interesting comment. Basically, the average user volume is down 16%. Two main reasons for that. The first one is the reduction we initiated already in November 2021. Before the start of the war between Ukraine and Russia, we were quite worried when we saw what was happening there. We decided already in November to reduce our exposure. Of course, as of February 24th, we decided to stop every single new transaction. As you know, in this business, those transactions over 3 months or 6 months duration. It took some time during 2022 to bring that business to zero. We have zero risk, so I think that should be also mentioned. We are completely out of that. For the time being, we hope that one day this war will stop, and we can, with our clients, again, have transaction in those very two important countries for the trade finance activity. The second reason is the reduction in currency prices in the second half of the year. Those two elements explain this reduction of 16% of average volume. If I talk about credit risk, I mean, there is very limiting new provisioning needs. The SME, our client portfolio is in very good shape. Although the economy is slowing down slightly, we don't see for the time being any sign of problem as far as credit risk is concerned. The wealth management business, basically here you have also, different, let's say, business lines. You have the onshore, the wealth management activities for private clients. We have our subsidiary, Banque Piguet, focusing also on private clients, and we have the institutional business, focusing on pension funds and other kind of institutional clients. Here, this is clear, due to the negative performance of the market, you see a decrease in AUM, in revenues, and operating profit. Clients are quite cautious for the time being, so there is less transaction. If you add that to the performance, which was not that good for all banks, all asset manager, I think you know that probably better than myself. Of course, the commissions or the revenues, which are mostly proportional to the level of AUM, they suffered quite a lot here. A decrease in revenues as well as operating profits. Trading, and I think this is very important to understand here, because I saw some reaction where I believe people do not understand exactly what we are talking about. Trading, the trading activities, as it is reported here, this is really trading activities. This is mostly Forex and some trading on structured products. This is essentially client-driven activities. When I took over this bank as CEO in 2008, I stopped over one year, because it took some time, I stopped all prop trading activities. We don't have the right people to do that. We don't have the muscles, et cetera. This is not an activity for a bank like BCV. It's already difficult for larger banks in Switzerland, we are not London-based or New York-based. prop trading is not for us. Here we're talking about client-driven activities, mostly Forex. This is not equal to the accounting line in the P&L, which is also called négoce or trading, Thomas will explain that in detail. You see a sharp increase here in this accounting line, this is essentially due to treasury, to balance sheets management, liquidity management activities. It has nothing to do with trading, prop trading. Don't mistake. In terms of trading, the numbers are quite stable. They are slightly up due to an increase in volatility on the Forex market, but it has nothing to do with prop trading or investment banking, whatever. The strategy of BCV has not changed and will not change as far as trading is concerned. Okay, I hand over to Thomas for more details. Thank you, Pascal. Hello, everybody. I'm on chart page 15. As mentioned, total income is up 6%, I will go deeper into that on the following pages. I will develop in more detail the operating expenses and depreciation, which together increased by CHF 9 million. The other provision and losses, well, in average, we are at CHF 2 million-CHF 3 million. We had releases of CHF 1 million last year, cost of -CHF 5 million this year, we are in the average, taking us to an operating profit of +4%. Last year we had real estate owned by the bank, which was sold with a balance sheet gain. This year there's nothing extraordinary or almost nothing to signal. Now, net profit is up to CHF 388 million higher than last year. You see that the taxes are slightly down. Remember that in 2021, we had additional tax charges due to the fact that a penalty payment on the settlement with regard to the DOJ, were at that time not fully recognized as tax-deductible, and that was corrected by that date. Now we're again in this normal corporate rate, normal taxes, and that's why they are down compared one year to another. Now here we are with regards to the different sources of income on page 16. Well, first of all, the net interest income overall is stable, and this is the accounting perspective. You see that from accounting perspective, net interest income is stable because net interest income before loan impairment is slightly down. We had on the Chicago impairment, we had releases, reversals this year, whereas we had some charges last year. This difference brings us to stable net interest income. Now the important point is here, the trading income is up CHF 46 million, the accounting line trading income. As Pascal mentioned, it is important that the main reason for the increase is linked to treasury operations, but which are from an economic perspective, should rather be in-interest income, but we put them with regard to our accounting practices in that line. What I'm talking about. I think you should remember that we do treasury operations, where we try to take advantage of the limits which we have at the Swiss National Bank. In the past, it was an limit up to which we of several billion CHF where we were earning zero when there was a negative interest rates. It's now a limit where we earn 100 basis points at the Swiss National Bank, slightly above sovereign. Now we are very interested to attract deposits, and it's quite interesting to attract deposits in FX. The interest charges for the FX deposits, they are booked in the net interest income line, and they are obviously with higher interest rates on FX, on US dollar and euro, increase of, provide actually for higher charges on interest income, which is obvious. The FX swap, which brings this into Swiss francs, and basically, which captures the yield on this, is accounted for in the trading line. As we have this huge difference in interest rates, the consequence is just obvious. The charges for these treasury operations have increased, and the trading result has dramatically increased with a positive sign. Well, I will be more than happy if you have questions on this, and we come back to this point. The key message is that for our shareholders, we take advantage to the full extent of what the Swiss National Bank provides us as an interesting limit to for placement. Which we are except for that from first, the first lecture, the accounting P&L is a little bit more difficult to understand. Now with regard to development of commissions, well, it has been said what is. You know very much that situations in the financial markets and with to trade finance. On page 15 on operating expenses, well, I think the key element here is the other operating expenses are slightly up because the full activities around sponsoring events, cultural events and has of course, started again after the COVID. We have a year of increase of 5%. We keep on working on controlled development of personal costs. Depreciation is slightly down. We have now, basically, there's no more depreciation of goodwill with regard to our filial. Our subsidiaries. With regard to head count, well it fluctuates more or less around the same numbers. Nothing special to signal here. With regard to total assets on page 19, you see this important levels of cash and equivalents and which are part of the game I described before. You see the mortgage loan development and development of other loans, which Pascal Kiener commented on. Financial investments increase, which is part of our financial strategy to have our financial investments, which are basically HQLA, which means liquidity reserve. On liabilities, the key element is that custody deposits develop now more kindly. We had a little bit high inflow during the negative interest period because we were not very aggressive with regard to negative rates for clients. Assets under management, well, well, it's important to see that the negative performance of -6% is of course realized that these assets under management, which we consider here, are as a balance sheet, as off-balance sheet positions. That is why you don't see the typical balanced portfolio performance, which would be rather -10% to -15%. The net new money is very satisfactory, very much in line of previous years. Remember that 2021 was a little bit high to the very precise for the reason I just mentioned before, that we had a little bit high inflow of liabilities, given our little aggressive conditions. Capital ratio, well, as a CET1 of 70.6%, FINMA decided to reactivate this countercyclical buffer with regard to residential mortgages. Well, something which is very discussable, but which is not really important for us. The leverage ratio of course, way above the requirements. Liquidity ratio also, slightly down, but well above requirements and our internal target line. The net stable funding ratio for a bank of like ours, of course, is not really a major issue. Given this positive development on page 25, we decided to propose to the 2023 AGM a dividend of CHF 3.80, which by the way, is the upper limit of the third horizon of our dividend policy which now comes to an end. It's the first time that we end an horizon with the upper limit. As you see on page 26, this is now a long story. The third horizon, if approved by the last year will be approved by the AGM, means that we have paid out CHF 1.5 billion over the total period. It's more than CHF 4 billion. We want to go on because basically from our key convictions, there's no change. It's in a commitment for a distribution in CHF for a 5-team time horizon. We basically want to go stable or higher condition that there are not any structural changes. Well, that's all from my side. Pascal? Okay. Looking forward, going forward. Just one chart on our expectation as far as GDP growth is concerned in our region. We expect GDP to decrease significantly in 2023, around probably 1%, between either 0.8, 1%, I would say. I do not expect any recession, both in Vaud as well as in Switzerland. Low growth numbers, around 1% or could be slightly less, but I don't expect any recession in this part of the world. 2024 should be probably better, but that's a bit far away to be very precise. The main message here is that growth will be low, but no recession expected. In terms of real estate, it's amazing that this dynamic continues. We had again in 2022 an increase in prices of flats or single family homes. We see, however, that the growth is slowing down. The prices are still going up, but at a smaller rate. I could imagine that slowly this trend will level up in 2023. I could expect a very slow growth in prices in 2023. Reduction in prices, I don't think. If there would be one, there would be a very small one. I don't expect a kind of a bubble exploding because basically, the demand is still here. I mean, the population is growing by roughly 1.1%, which is roughly 9,000 persons. The canton builds something like 3,000 flats or houses. You see, if you make the math, you see that this is quite a good equilibrium. You see that clearly now in this vacant housing rate that went up in the last 10 years, and slightly back going down in the last two years. Expect this vacancy rate to stabilize around 1%. Given that demand, I don't see why how prices could really collapse. Clearly the increase in interest rates will slow down the market. I think has already slowed down the market, but the effect on prices is not really seen yet, but I expect it in the next couple of months. I would not be surprised if the increase on prices would be around 0% or 2% at most during 2023. For us, as far as revenues are concerned, this pressure we had due to negative interest rate on the mortgage books, this pressure is over. There will still be a commercial pressure, competitive pressure, this is very clear. The mortgage book will reprice itself at a higher rate than before, so that's a good sign. On the other hand, the financial market are still in difficult situation. We don't know exactly how the geopolitical problem will turn. We are quite cautious as far as the commission fees, et cetera are concerned. It is clear that the trade finance activity will be reduced for a couple of months. I mean, we're not going to find or to try to have other type of transaction in other type of countries that our client or we do not master to compensate for the loss in Ukraine and Russia. This is a pressure on the revenue since the volume will be slightly lower, at least till we see exactly what will be the future of those territories, especially what's going to happen with the war. Basically, our guidance is that we will evolve in the in line with previous years. As usual, we will be very careful with our costs. That's it. I think, you have seen our message regarding the dividend policy, so I think that should give you also a clue on how we see the business going forward. Thank you very much. We are of course, ready to take your questions, if you have any. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to choose only handsets and eventually turn off the volume from the webcast. Webcast viewers may submit their questions in writing by the relative field. Anyone who has a question may press star and one at this time. First question comes from the line of Stefan Stalmann with Autonomous Research. Please go ahead. Yes. Good afternoon, gentlemen. Thanks for the call. I have a couple of questions, please. The first one on, very broadly, net interest income in 2023, given what Swiss interest rates have done. Can you give us a rough sense what you expect on NII, given these benefits? Related to that, on the trading income from treasury operations that you explained, could you maybe add a little bit more color on the size of these deposit flows, and whether or not you think that that kind of income contribution that we've seen in the second half is sustainable going forward, and what the swing factors are that influence the size of this revenue line? The last question, it relates to the LCR ratio, which went down quite a bit during the year. if you look at the balance sheet, it's not immediately obvious why. Could you maybe add a bit of color of why you've lost almost 30 percentage points of LCR during a year when the balance sheet hardly changed? Thank you. Okay, Stefan, pleasure to answer your questions. It's actually important to understand this, communicating baskets of net interest income and trading income. Hello? Yes. [crosstalk] I have a feedback loop. Okay, it's good. From a business perspective, before going into accounting lines, the important dynamic now is that the perspective is very positive, but we have to be cautious. Given that we are back into positive interest rates, and we start to earn our salary, and again, on the liability side of the balance sheet, right? We make our way back to commercial margins on the liability side, whereas before we were basically subsidizing the deposits. Right? That's obviously the key element which drives the revenues and gives a positive dynamic to revenues over the next 1 to 2 years, at least. That is the big picture we have to have in mind. We also have in mind that there is probably some increasing commercial margin pressure on the asset side. I mean, at the same time, this is continue to grow, so that is secondary. Thirdly, we come from a quite particular situation with the strange economy we were living in during the negative interest period. Now because you remember, and then I go back into the accounting lines. You remember that in that period, we were on one side earning quite substantially From this exemption level at Swiss National Bank. That's a key point, substantially, right? Because from -75 basis points to zero, it's quite a lot, huh? I think we never gave the precise number, but it was more than CHF 10 billion, or is more than CHF 10 billion of exemption level or level limit at Swiss National Bank. That was big money. Obviously, there is now much less interesting, I come back to that. We have to keep in mind that from the dynamics of interest income, we had still, and it was written in the annual report, a significant level of negative interest rates charged, right? Which obviously gave a part of the solution, but it was a negative time because the bulk of deposits were losing money on. Right. You take this into the accounting lines, right? The accounting line Interest income, right, has no more the negative interest rates which were charged, which basically was reducing the charge of Interest income. Okay? The accounting line Interest income is always the one which pays, of course, the deposits in FX. And these deposits they are basically the key element to earn with the Swiss National Bank or one key driver to earn with the Swiss National Bank. And these charges now increased significantly giving to the high interest rates of FX of Europe. Whereas on the other hand, the gain, the net gain obviously is decreased. The net gain was very high when there was a 75 basis points difference on the account of Swiss National Bank. Now it's much smaller. The contribution of the exemption level, which is from a net gain, which is earned by Swiss National Bank is less. From a growth perspective, there is still a significant trading income linked to these arbitrage operations because it has first to compensate the gain of, obviously, on the charge, which you pay on the FX deposits, plus a little spread, which then some of this comes in over the trading income. Going forward, this arbitrage game is most likely to continue but to decrease slightly. It is possible that the Swiss National Bank will progressively decrease this exemption level as we go back to a kind of more normalized interest rates. Basically, when the exemption level or the special limit at Swiss National Bank disappears, there will be no more or almost no more this arbitrage game, and we will have a quite significant shift of trading income, or decrease in trading income and significant increase in interest income because we will take, we have definitely less FX deposits which we take in, less interest charge. I agree it's difficult to explain it on a telephone line. I hope you understand what I'm telling. Yeah. I think I get the message roughly. One of your competitors on the wealth management side is doing very similar things, I think, to UBS. Okay. I don't know. I don't know. I mean, what now makes the comparison between banks a little bit more difficult is that I know, without naming them, that some banks, cantonal banks, they publish this type of swap result in the interest income line, right? Which probably we could also do, which would be a change in accounting principles. Now that we've run all this year with this dynamic, and we try to understand and explain it, we don't think to change our accounting principles now. We could keep on accounting that this way. Yeah. Okay. Obviously it's difficult for the comparison of accounting lines. Okay. That was between those two accounting lines. Now, LCR. Well, LCR, to make it very simple, it was particularly high due to excessive deposits over the last years, right? And it's rather now coming back to the target level, which we were shooting for. Just to set the statement. Right. Okay. Thank you very much. Okay. Thank you. As a reminder, if you wish to register for a question, please press star and one on your telephone. Star followed by one. We have a question coming from the line of Andreas Venditti with Vontobel. Please go ahead. Yes, thank you for taking my questions. actually, it's on the trade finance, where you gave, you know, a rather cautious measure message there also in terms of outlook, where you still, you know, believe that the activity will remain reduced. My question more related to the impact on the revenue line. From the reduction that we've seen last year, I guess or we might not have seen the full reduction in the revenue line. Is that correct? We were gonna have some impact also in this year, or do you think this will be, you know, stabilized going into this year? Thank you. Look, I don't have the precise figure, but I think it will be more or less stable. More or less stable. I don't expect, I don't know, CHF 10 million or less revenues. It could be +CHF 2 million, -CHF 2 million. Let's say from a big picture point of view, I would say stabilized. Okay, thank you. We have a follow-up question from Mr. Stalmann with Autonomous. Please go ahead. Yeah, sorry. I just take the opportunity that it doesn't seem to be so busy and maybe ask one additional question, please. On your dividend range guidance for the next five years, do you also expect that the payout ratio will roughly remain where it has been in recent years? Do you think that the payout ratio that produces these dividends could be different from the last couple of years, materially different? Look, I don't think so. I mean, if you look at our payout ratio, it went from, I don't know, if you take the last 15 years, probably from 80% to 95, depending on the year. I think our very proposition is to say that we will pay these dividends in the next five years, more or less, whatever happens. I could well imagine in one year if we have, I don't know, a bad year, maybe we could have even a payout ratio more than 100%. I think we have the equity to do that. If there is a structural change in the market or I don't know where that would be as a different story. Now we have. We did that for. We have done that for the last 16 years, I think we are quite credible as far as this kind of strategy is concerned. I could imagine that the payout ratio will be in the same range. Now you see, there is today a big lever that you have to understand. I mean, this is the pricing on the deposits. You've seen what happened in Switzerland, some banks increase the pricing, all those follow. I think there is still in 2023 an uncertainty on how the pricing on the deposit side will develop. We don't know. It depends on the competitive pressure. We don't know really. And this is quite a big lever. You see, if you pay 20 basis points or if you have to pay 50 basis points to retain the funds, it's a different story. For the time being, I think the Swiss banks have been able to have, let's say, quite cautious pricing. We don't know exactly what's going to happen here. This is why we are also cautious. Now, maybe at the end of this year or we see exactly what happened as far as pricing on the deposit side is concerned, and then we can re-discuss that. For the time being, we were not in a position to say let's... If you look at the number, you're right. I mean, CHF 388 million, we have a payout of 80%, 84%, 85%, 5%. That could be higher. Now, we could have a payout of 90%. We did it several times, so it's not a big issue because we don't need that much equity to finance our growth, where if we have CHF 20-25 million every year, CHF 30 million, that's enough to finance the growth. To keep a Tier 1 ratio stable. Now but you see, this is an uncertainty. I don't know how this pricing will develop. If you imagine different scenarios, I mean, the impact is quite, it could be quite large. We'll see how those things develop, and maybe we can be more precise next year. Great. Thank you. Very helpful. Thanks, Pascal. Once again, to ask a question, please press star 1 on your telephone. There are no more questions at this time. Gentlemen. Okay. Back to you for closing remarks. Okay, we should stop. Okay. Thank you very much to everybody. Thank you. Bye-bye. See you next time. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.