In spite of the volatile markets and the strong Swiss franc, we were able to post operating income of CHF 404.9 million for the 2011 business year. This corresponds to a year-on-year decline of CHF 31.9 million, or 7.3 percent.
In 2011, as in the previous years, the two revenue streams net interest income and net fee and commission income made the main contribution to the Group net profit. Net interest income rose by 8.3 percent to CHF 189.8 million (2010: CHF 175.2 million). This was attributable to a decrease in interest paid of 9.3 percent to CHF 107.4 million and an increase in interest income of 1.2 percent thanks to higher client assets under management. Although the financial markets recovered during the first half of 2011, this was offset, however, by the negative development in the euro area during the second half of the year. Against this background and in view of the strong Swiss franc, the expected earnings from fee and commission business were not generated. As a result, net fee and commission income fell by 6.8 percent to CHF 208.9 million (2010: CHF 224.0 million). This was largely attributable to a decrease in brokerage fees of 11.9 percent to CHF 73.4 million and a 7.4 percent decrease in custody fees to CHF 37.5 million. On the positive side, other fee and commission expenses were reduced by CHF 4.8 million, or 14.6 percent to CHF 28.1 million. In total, fee and commission expenses decreased year on year by CHF 4.0 million, or 8.5 percent. In contrast, a loss of CHF 6.2 million in trading income had to be booked compared with earnings of CHF 27.5 million in the previous year. This was mainly attributable to the change in value of interest rate swaps, which generated a loss of CHF 33.8 million in 2011 (2010: loss of CHF 2.1 million). Other income totalled CHF 11.8 million (2010: CHF 13.5 million).
Operating expenses climbed year on year by 22.0 percent to CHF 387.1 million. This was largely due to a specific value adjustment made to a Lombard loan as well as higher provisions made for operational risks. In addition, depreciation and amortisation increased by CHF 6.5 million as a result of the investments made in connection with the introduction of the «Avaloq» banking software.
At CHF 181.1 million, personnel expenses were only slightly above the previous year's level of CHF 178.3 million. General and administrative expenses climbed by CHF 3.4 million, or 4.1 percent, to CHF 88.1 million (2010: CHF 84.6 million). The increase was attributable to higher expenditure in connection with the new Group-wide IT platform and to one-time costs in relation to the 150th anniversary of Liechtensteinische Landesbank AG.
At the end of 2011, adjusted to take into account parttimers, the LLB Group employed 1'123 persons (31 December 2010: 1'087 persons). The average headcount in the year under report was 1'105 persons (2010: 1'070 persons).
Operating income 2011
CHF 404.9 million