Vontobel Holding AG (VONN) Earnings Call Transcript & Summary

Good morning, everyone. Today, Georg, Thomas and I will report on our financial results and share highlights on our strategic progress from the first 6 months of the year. First, let's briefly review the market context of this first half year and how it played into our results. Equity markets witnessed sustained strong performance, fueled by easing inflationary pressures, continued resilient global growth and the end of the tightening cycle for the major central banks. First cuts were delivered by the European Central Bank and the Swiss National Bank. These costs, combined with the market expecting the Fed to start its own easing cycle in the second half of this year, allowed for consolidation in fixed income markets. Within currency markets, the dollar emerged as the strongest performer among major currencies driven by robust economic data and a delayed easing cycle. The Swiss franc, despite an initial decline in the first quarter following a surprise rate cut by the SNB recovered after the European Power elections in June. Against this backdrop, investors' willingness to engage improved from low levels. We saw higher client activity and increased demand for riskier asset classes as well as fixed income. Our strong results reflect our ability to fully capture these positive trends. Turning to our key messages for the first half of 2024. We had a strong start to the year with profit before tax increasing 12% to CHF 173 million. Net inflows were CHF 2.3 billion, driven by strong inflows from Private Clients and a hold in Institutional Client outflows, a good result amidst an ongoing challenging environment for this client segment. Our assets under management with Private Clients surpassed the CHF 100 billion mark for the first time, a very fitting results for our 100-year anniversary. Our balance sheet remains very robust as does our capital position with a CET1 ratio of 18.3%. When we met you back in February this year, we highlighted 3 initiatives to sharpen and accelerate our strategic execution. We have actioned all of them. We now operate a sharper distribution model with 2 client segments: Private Clients and Institutional Clients. Digital Investing, our hub for digitalization, has successfully been integrated into the organization and is even more efficiently supporting our firm-wide digital transformation. Earlier this month, we successfully closed the acquisition of a significant minority stake in Ancala, a leading private infrastructure manager. This marks a significant milestone in our private market strategy. The acquisition expands our investment capabilities and represents a clear additional avenue for growth. After reducing costs by CHF 65 million on an exit rate last year, we are on track to achieve another gross cost reduction of CHF 100 million by the end of 2026, of which roughly half by the end of this year. The outcomes and benefits of the actions we have already taken or are implementing will be progressively visible in our results. For Private Clients, the positive momentum continued in the first half. Our financial performance was strong with operating income up 10%. Our assets under management surpassed the CHF 100 billion mark. Flows were similarly strong with the newly hired RMs meaningfully contributing to our net new money growth. Our client proposition is squarely centered around investments, not credit, and we have demonstrated our ability to grow in our focused markets which cover the bulk of the world's wealth growth pool. We further operate a leading digital distribution model for Structured Solutions. This first half results proved the strength of our model. We captured strong flows and successfully served the higher client engagement. We have a strong foundation to continue this positive momentum. Let's now focus on our Institutional Clients segment. We have successfully halted the outflows in the first half amidst an industry which generally continued to see outflows in actively managed investment strategies. As anticipated, fixed income, but also tailored multi-asset led the return. In fact, the bulk of our strategies showed inflows, except for our emerging market strategies and for a one-off impact on our quality growth equity strategies due to an in-sourcing of our distribution capabilities. With this and the support of positive market performance, total assets under management increased by 8%. This period also saw the successful launch of a customized yet open to all client solution, combining our skills in sustainability, active fundamental equity as well as quantitative management. Vontobel's sustainable Swiss Equity Income Plus reached nearly CHF 0.5 billion in only a few months. We have recognized capabilities and the expertise to combine them to answer clients' needs. In other words, a strong positioning to capture flows when they return more sustainably. And now over to Georg.

Good morning and a very warm welcome from my side. The acquisition of a significant minority stake in Ancala marks an important milestone in delivering our private market strategy. Ancala is a London-based and highly experienced private infrastructure manager with strong growth prospects. Through this acquisition, our clients will be able to access stable cash flows, which are inflation protected with low correlation to the overall economic cycle. The returns will be further enhanced by the long-term value creation brought by Ancala's active management. Vontobel has flagship products with strong performance across all asset classes, whether our clients are seeking solutions in equities, fixed income, multi-asset, quantitative or private markets, we are able to provide it. As mentioned by Christel, we are also increasingly leveraging our cross-asset expertise, enabling us to offer solutions tailored to unique client needs. We anticipate a rising demand for personalized investment solutions, not just from [indiscernible], but also from our larger Institutional Clients and distribution partners. Our efficiency program is on track, and we have already started to see its first benefits. Our goal is to become faster and more efficient with clear benefits to our clients, employees and shareholders. We are in the progress of systematically implementing further measures. Roughly half of the gross savings will be achieved by year-end and over 75% by end 2025. Our efforts will concentrate on 5 main areas through which we will release nonpersonnel and personnel costs: consolidate our IT infrastructure and applications, reduce vendor spend, automate processes, focus on growth and productivity projects, and use technology to improve our operational efficiency. This 3-year program runs until the end of 2026. We anticipate minor to no impact on our revenues as our focus lies on productivity. We believe that this program will allow us to reach our through-the-cycle 72% cost income target. Beyond this metric, this program is essential for continuing the successful growth path Vontobel has achieved over the last 2 decades. By becoming more efficient and freeing up resources, we will at an accelerated rate, generate capital, which can be deployed for organic and inorganic growth. Our strong business momentum, coupled with accelerating our strategic execution means that we are well positioned to reach our through-the-cycle targets. We have started actioning a 3-year comprehensive efficiency program, which will translate into higher returns on capital. Our capital-efficient business model enables us to grow with strong capital ratios while maintaining an attractive dividend. Therefore, our through-the-cycle targets remain unchanged. With that, let me hand over to Thomas, who will cover the financials.

Thank you very much, Georg, and a warm welcome to everyone from my side as well. Let's begin. As you can see, we have produced strong operational performance in the first half of 2024. Our profit before tax saw a significant increase of 12%, rising from CHF 154 million in the first half of last year to CHF 173 million. The primary catalyst for the financial performance was an increase in the revenues of CHF 28 million. However, we also saw a rise in costs by CHF 21 million year-over-year. CHF 9 million of these cost increase of CHF 21 million comes from last year's one-off initiative of accelerated relationship manager hiring. Foreign exchange effects resulted in a profit reduction of CHF 10 million versus the first half of 2023. And finally, the total impact from efficiency work in the last 1.5 years is a cost improvement of CHF 22 million. The CHF 22 million contained costs to achieve of CHF 9 million. This means one-off charges due to the restructuring of digital investing and the efficiency program. The group net profit saw a more modest increase of 2% due to an increase in the tax rate from 17% to 25% year-over-year. The tax rate increase was driven by the global minimum tax regulation, which led to a tax rate -- higher tax rate for our Dubai entity, an accounting adjustment and reduced participation exemptions in the U.K. After adjusting for one-off items, the tax rate was approximately 22%. Moving on to Page 13. Assets under management grew by 9% from CHF 207 million to CHF 226 million. Most notably, as mentioned before, our Private Clients assets under management surpassed the CHF 100 billion mark for the first time, reaching CHF 109 billion. In the first half of 2024, we also saw favorable tax -- favorable FX tailwinds, particularly in the first month, and we saw a positive contribution from market and product performance. In terms of net new money, we reversed the outflows from previous year. Private Clients contributed CHF 2.4 billion net money, resulting in an annualized growth rate of 4.9% after CHF 2.1 billion last year. And most importantly, we have successfully halted the outflows in the Institutional Clients segment. Moving on to operating income, which has overall increased by 4% to CHF 728 million compared to the first half of 2023. As you can see from the graph in the middle, net interest income decreased by 34% to CHF 63 million due to rising refinancing rates, i.e. a shift in the deposit mix towards term deposits, core notes and term notes. These generally carry higher interest rates, especially for U.S. dollar deposits. Net fee and commission income remained largely constant year-over-year, while trading income increased by 33% due to heightened client activity. When breaking down the revenues by business segment, Institutional Clients revenues decreased by 3%. They were still influenced by the assets under management reduction in the second half of 2023, while the Private Clients segment increased by 10%. In terms of margin development, both business segments maintained constant margins compared to the first half of last year. Institutional Clients margins remained stable at 37 bps, following a slightly weaker second half of 2023. The margins in the Private Client segment, which includes the Structured Solutions business also remained steady. The decrease in interest rate margin was offset by an increased contribution from client trading and Structured Solutions. Let's shift our focus to costs now. We have seen a decrease in the cost/income ratio to 76.1%, which is a positive progression towards our target of 72%. Overall, costs have risen by 2% or CHF 9 million on a half year basis. This overall rise comes despite successful cost reductions and reflects higher costs associated with the ongoing efficiency program, and the accelerated hiring of approximately 50 relationship managers, which are now fully reflected in the costs in 2024. Let me make some additional remarks on the efficiency program. Following last year's CHF 65 million cost reduction, with earlier this year launched a program aimed at further reducing cost by CHF 100 million. This program is designed to achieve a cost-income ratio of 72%, even in less favorable market conditions. It's crucial to note that this is not the traditional cost-cutting exercise. It is a series of projects to enhance our productivity and efficiency. Let me repeat this, this is not a traditional cost-cutting exercise. We work on enhancing our productivity and efficiencies. Areas like consolidating the IT landscape and end-to-end process automation will make us efficient and not cheap, and it will help us scale better in the future. And we are progressing well along this path. As of the end of June, we've realized annualized run rate savings of more than CHF 20 million already. Now let's turn to the balance sheet and the Basel III ratios. The group balance sheet has expanded by CHF 4 billion since the end of the year. This growth is attributable to deposit inflows and increased business volume from Structured Solutions. Total deposits have increased by CHF 1 billion, reaching CHF 11 billion or when including the call notes and term notes even CHF 14.1 billion. Balance sheet equity has risen by CHF 71 million to CHF 2.16 billion and core equity Tier 1 capital has increased to CHF 1.27 billion. Due to increased client activity, also our risk-weighted assets have obviously grown from CHF 6.5 billion at year-end to CHF 6.9 billion now. As a consequence, the CET1 ratio has slightly decreased to 18.3%, which is down 0.4 percentage points from the end of last year. After the Ancala acquisition, which we have closed on July 1, the pro forma CET1 ratio stands at 15.5%, a reduction of 2.8 percentage points. This reduction is, however, not only due to the purchase price, as approximately 0.5 percentage point is attributable to additional risk-weighted assets stemming from the acquisition. Other Basel III ratios remained strong, with a total capital ratio of 23.6%, an LCR of 222% and a leverage ratio of 4.9%. But most importantly, we've continued to maintain our conservative risk profile and cautious approach to risk taking. Now Slide 18 is an evergreen for those of you who are loyal participants in this call. We focus on 3 key metrics to evaluate not only the short-term performance, but also the long-term health of our organization. First, revenue and profit growth; second, capital accretion; and third, value creation. In the first half, value creation was positive with a return on equity of 12.3% compared to a cost of capital of approximately 9.3%. Additionally, Vontobel has created a tangible book value of CHF 80 million, leading to an increase in the tangible book value per share by 4%. In total, including the dividend paid out and the tangible book value generated, we have created almost CHF 250 million of capital in the first half of this year. In other words, we've continued our long-term track record of creating value and creating capital. Now let me summarize the financial results. We had a strong start into the year with positive developments across flows, assets, revenues and efficiency. Financial and operational performance is strong, operating income is up 4% and profit before tax up 12%. We have also proven that our efficiency measures start to show effect. Our balance sheet and capital position remains strong as do our performance and health metrics. We have a significant capital accretion, we have continued value creation, and we have further growth of the top and the bottom line. And this, in our opinion, are the signposts of a healthy financial institutions. With that, I give back to Georg.

Thank you, Thomas. Please let me summarize. We've had a strong start into the year with profit before tax up by 12%. Net flows were positive, driven by strong inflows from Private Clients and hold in institutional outflows. Assets under management grew by 9%. And for the first time, we surpassed CHF 100 billion in Private Clients assets under management, and we have made significant strategic progress. Digital Investing has been successfully integrated into our organization, and now we operate a sharper distribution model with 2 client segments: Private Clients and Institutional Clients. We marked a milestone in our private market strategy with the closing of the Ancala transaction. And finally, we are on track to achieve a gross cost reduction of CHF 100 million by end 2026. Now let's open for questions.

[Operator Instructions] Our first question comes from Máté Nemes from UBS.

Two questions. The first one is on asset management. Could you perhaps give us a little bit of color what drove the 3 basis point improvement in gross margin in Institutional Clients. It seems like the net new money close to 0 on a net basis in which inflows presumably in multi-asset and fixed income and still difficult, perhaps outflows in emerging market or equities, I would have expected somewhat weaker margin. Have you seen any performance fees, any special effects in there? And how should we think about the impact on the margin going forward? That's the first question. Second question is on cost savings. Thank you for the details on the phasing of the cost program. Can I ask if you could give us a sense how we should think about investments and underlying growth in the business. Is it fair to assume that on an underlying basis, costs could grow somewhat above inflation, factoring in some investments. And then the efficiency program, the CHF 100 million would help to reduce the cost base from then onwards. In this context, I'm just wondering if you could also mention what is the net cost takeout by the end of 2026 that you expected?

Okay. Let me get started with your question on asset management on the margin. Indeed, this is quite a rebound. There's in essence, 3 effects that play a role here. First, it's a very trivial one which is rounding. If you calculate a bit more accurately, you will see that we just flipped from one to the other side. The second is we had some currency effects due to the way fees are calculated. Fees are sometimes calculated with a bit of delay, as you may understand. And we had last year some very violent movements, in particular in the U.S. dollar towards year-end, which had an impact on them. And the last one was, as I have mentioned at the end of the year, we had some catch-up payments in the second half of last year, which had to do with various payments that we did for the first -- 1.5 years before. So the margin in the second half of 2023 was artificially compressed and a bit lower than what it actually was.

On your second question, and I would invite in case because the line broke a bit. So if we're not answering fully, please ask again. I guess your question was about whether we will continue to invest in underlying growth? The answer is yes. That's why it is an efficiency program. It's precisely to retain this flexibility to continue to invest in growth. We have done so in a one-off accelerated hiring initiative last year for relationship manager in the Private Clients distribution segment. It could be another opportunity. Of course, inorganically, that's a different story, but inorganically, of course, the closing of the Ancala transaction. So it clearly shows that. Indeed, it is a forward-looking focus that we keep very squarely on growth. For the cost-income ratio, our target is 72%, as mentioned by Thomas in his comments. The target and the program is designed that we reach this roughly independently of the market conditions. So the exact timing as to when we reach it depends, obviously, on market condition, but that is our target, and we stick to our guns on that number.

Next question comes from Nicholas Herman from Citi.

Yes. Just to follow-up quickly on the margin question. It sounds like that the margin evolution is actually, to some extent, expected, given that the second half margin was artificially compressed. So I guess the follow-on question is, given that the CHF 100 million cost savings were designed effectively to get you from where you were then, the 72%, why such a need for such a large cost savings, I guess, is the natural follow-on question. A second question, please, would be just in terms of outlook for flows, particularly on the institutional side. Yes, on the institutional side, can you talk about the pipeline more institutional investors are telling you? I think we clearly have seen initial pickup in fixed income across the industry. It looks like -- I wonder if you're sensing as well that multi-asset institutional investors are slightly -- becoming slightly more -- a little bit more warming to despite higher interest rates. And on the private side, could you talk as well about how you see the outlook for net new money, given obviously quite a notable slowdown in the second quarter?

Let me start with the first question. Look, the margin rebound is not directly related to the cost program. We haven't started the cost program to counter the margin, which was down. Those things are not related. The cost program and we normally don't speak about it as a cost program, we call it an efficiency program. And it is what I said it is, we can always cut 10% of the cost if you do this and you go in very hard, you cut very fast, what almost always happens is the revenues come back, the cost bounce back immediately because you haven't improved anything. And what we want to do is exactly the opposite. That's why we take also 3 years. What we want to do is we want to get efficient and productive, and we want to get better as opposed to just for the optics takeout costs. The cost is a positive/negative side effect and the other side effect is we want to scale, we want to increase our marginal cost-to-income ratio. When the revenues go up, we want to scale better than what we did in the past. And the program has been designed to achieve actually just that. And we believe we can do this, as Georg said earlier, without damaging the growth outlook or the growth opportunities. If you look at what we're doing, consolidating IT infrastructure, that's not necessarily that we exit whole client segments and other things. But what we will do is we will, in a very, very focused way, make sure that we get more efficient, more productive and we get better day by day. That's the core focus of what we're talking about here.

Yes. And let me talk about the outlook on flows. If you start with the institutional side, as we have seen and we talked about during the last call, half a year ago, we have economy that is changing around. So we had a reducing -- interest rates reduced in the Swiss francs, in the euro. Now we will see what happens with inflation also in the United States and interest rates, but in general, that is an environment where investors come back from the sideline. And I think we are very well positioned to profit from that, be it in the fixed income, in the multi asset, in the equity strategies and the others. So that is the institution side. On the private side, we have -- we'll continue to hire relationship managers, albeit not at the same number as last year. Last year was an extraordinary year. We see that they're producing growth already in addition to the relationship managers we have. Yes, there are some differences between quarter-by-quarter, but we have that every year. So I wouldn't read too much into this. Yes, so we are confident that here, the machine will continue to deliver.

Can I just ask a follow-up, please, just on the margin point, please. So just -- could you just help me understand how much, if I tell up at all, a higher market level supported the Institutional Client fee margin, please? Just to get a better sense of bridging the gap between particularly the second half margin and the first half margin?

You mean a higher market level, you mean if the equity markets and fixed income markets are higher? In terms of variation?

No, correct. So obviously, we have seen higher equity markets this year compared to second half of last year. So just how much of a support was that for the Institutional Clients or asset management margin?

Not a lot.

It wasn't at all. Just to be clear. Or it was?

Yes. Yes. I mean not a lot. Maybe it was a tiny bit, but what I said earlier is the pressure that we had was coming from some catch-up payments and some currency movements because that has to do with the fact how the revenues are calculated. Are they based on assets under management in this month or 2 months ago or 3 months ago? Are they calculated quarterly? These things have an effect if you have very, very significant movements in FX. And as you may remember, the U.S. dollar moved by almost 10% from the first of November to the end of the year, and this is where we saw some effect, but it's not driven by the market level as such. Because we're in the first half, and what you also see is the performance fees are limited. We take them in the second half, not in the first half.

The next question comes from Daniel Regli from ZKB.

I have a specific question on the net interest income and in particular, obviously, on the group level net interest income has dropped by about CHF 32 million year-on-year. Obviously, this is probably due to the kind of changed interest rate environment. But can you maybe elaborate a bit what exactly of the net interest income is coming in on the Private Clients side where I see only, let's say, a marginal decline in net interest income. And how do you kind of decide what is booked in Private Clients and what is booked in the corporate center?

Look, the corporate center is basically a consolidation entity. So it's very difficult to take them apart and give significant meaning to these numbers, if I may say so because we would need to take you through all of the consolidation bookings. What's important is on net interest income, if you dig a bit into the half year report, what you will see is the net interest -- the revenues from interest income are up year-over-year by CHF 10 million. But what has happened is the interest rate expenses increased from CHF 31 million to CHF 70 million, and that drove the net interest income down. This is -- first of all, this is to be expected, right? We had a fast move up in the interest rates, then interest rates remained stable. In Switzerland, even they came down a little bit. So what happens is, of course, the refinancing over time catches up a little bit. In our case, what we have seen is we have seen shifts from the classical site deposits towards term deposits, call notes and term notes, all of which pay higher interest rates, right? So if I give you an example, if you look at the deposit line in the balance sheet, it is up CHF 1 billion, but the site deposits are down CHF 500 million, while fixed and core deposits are up CHF 1.5 billion. So you see the mix of the deposit products has changed, which has increased the pressure on the net interest income. That's the background to this.

I mean I understand this, but in my understanding, the key driver for the net interest income is the Private Clients business, given the Institutional Clients business virtually has no balance sheet business or interest income business. And therefore, I do not understand why such a kind of large part of the expenses is allocated to the corporate center while obviously, more of the income is allocated to the Private Clients segment?

Don't forget, we have a Structured Solutions business. which has huge -- a significant bond operation, of course. And on the balance sheet, the largest chunk is coming from this and the respective refinancing cost of it.

Okay. And can you maybe also explain or lead me through a bit the developments in the Structured Solutions business. What has led to this kind of quite significant increase of 25% plus year-on-year in the revenues with the certain product categories, which were particularly on demand and in how far can we consider this revenue stream to be sustainable?

Yes. In this -- let me start with the second part. The sustainability of Structured Solutions business is always a very, very difficult question for us to answer. In general, let me say this, volatility is good for this business. And we have some expectations that there might be -- ahead of the U.S. elections, there may be some volatility. Now what happened in the first half of the year, we saw significant demand for trading in the Private Clients side, a lot around FX and FX positioning and on the classical structure product. Of course, the famous MAG5, NVIDIA, all of Tesla, there was a lot of activity around these things. And secondly, particularly in the first quarter, let's say, in the first 4 months, we saw also quite some flow, I mean, trading flow from clients on the crypto products. This drove the increase in the Structured Product revenues.

The next question comes from Anne-Chantal Risold from Octavian.

Maybe to come back on the net new money flow. I mean, after a very good Q1, you would say, significant weaker Q2 performance and slowdown in float. So maybe if you could basically tell us what were the driver for this weaker Q2 results? And also on the -- you mentioned before the RM, you had a strong RM hiring. If we look actually net-net in H1, I think in your private client, we see that we have actually net lower number of RMs on your balance sheet. So do you have any preoccupation also that you can have some attrition going forward on the RM front?

So thank you for your question. I think on the net new money, I would just refer to the answer last time. I think we always have this volatility quarter-to-quarter. It has to do with larger deals when they come in, when they not come in, they're postponed, et cetera, et cetera. I wouldn't read too much into this. When we talk about the RM hirings on the private side, it's a bit the same. We don't hire just because we want to hire. We hire then when we find the right profiles. We have communicated the last time that we interviewed over 700 relationship managers to hire 42 net during the last year. And that has to do with the fact that we need to find people that run according to our business model and according to our values. Business model is investment-led, not credit driven. There's a lot of business out there to be picked up in the credit space and related space, that is not our business. Our business is the investment space. And secondly, it's a value question. And then I think one can also say the market is a bit over-hired after the huge activities we had last year. On average, we have hired in the past anywhere between 15 and 20 relationship managers. We more than doubled it last year, and so did many of our competitors. They did even more than double last year. So there is a bit to come at this point. We will continue to hire whenever we find the right profile and the right opportunity. But again, hiring relationship managers that don't fit is probably one of the worst business cases that I can imagine in this business.

Yes. But I mean, it's not on -- okay, hiring. It's true, but that means also that the people, basically relationship manager that left during H1 is basically actually for you an efficiency. Again, if you look at the AUM per RM that you are actually increasing, so you were basically happy to let go some of your RM.

There is always a certain churn because first of all, some of them retire. The relationship managers with us always stay a very long time. We have a lot of people retire here. And secondly, yes, sometimes business case don't work out, and then we cannot watch forever. So you always have a certain base journey. It is not higher than it usually is, but again, the net figure is the net figure. We feel very, very comfortable confident that we will continue to grow our relationship manager base and with that, having a strong contributor to our net new money, our flows on the private side.

We will now take a question from the chat box from Dina Holtz. Where does the net new money come from? How many jobs have already been cut and how many jobs are still to be cut?

So on the net new money, as we said, it's CHF 2.4 billion from the private client segment out of the CHF 2.3 billion. To repeat on the Institutional Clients side, we have successfully halted the outflows. We've basically seen inflows in all segments but emerging market segments, whether fixed income or equities, and we had a one-off negative impact on our quality equity -- quality growth equities, but that was due to a one-off change in the distribution model to in-source. Thomas, do you want to take the second question?

Yes. So we're a bit careful with speaking about job cuts in general. There is -- first of all, there's always fluctuation. Georg has explained it. Christel has explained it as well. So there's always fluctuation. So for the -- in terms of the amount of people, what we have done so far is we have integrated DI. And through this process, we have realized some synergies. The lion's share of reduction of, let me call it, a workforce in the broader sense is coming from contractors that we didn't need anymore because we made adjustments and we have in-sourced some of the things. So the amount is very small. And as I said earlier, the jobs still to be cut, which was your formulation. And again, we're very careful with this because we -- of course, people will be elected. 70% of our costs are directly or indirectly influenced by people, but it will be a very limited amount, and we will make it mostly through churn. I know this always sounds a bit unbelievable or odd, but we're a small company. This means we manage our capacity a lot with external sport, right? We increase the capacity, reduce the capacity. And one of the things is we will significantly reduce the external support that we have. This is where we will start. And secondly, because we have 3 years and increase the productivity, and we do things like end-to-end process optimization, we will very, very actively use the natural fluctuation rate that we have in order to reduce the headcount.

We have a follow-up question from Mr. Daniel Regli from ZKB.

One more question also on the cost. Can you maybe help me also a bit understand the increase of the operating expense, particularly versus H2 last year, where we saw a quite significant increase of about CHF 50 million plus in the cost base? And then secondly, this CHF 8.6 million one-off expense? Are these mostly personnel expense? Or is this split equally between personnel and general expense?

Let me start with -- look, the costs and the revenues, they breathe a little bit together, right? So if -- and that is what I have meant when I was talking about this -- the cost increase that goes with the CHF 28 million revenue increase. The CHF 8.6 million was roughly 2/3 was personnel-related, severance related costs and 1/3 was general cost items that we have reduced in terms of restructuring costs.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to the management for any closing remarks.

Thank you all from our side for the discussion and your interest in Vontobel. We would also like to take this opportunity to personally welcome you to our Investor Day in Zurich on the 7th of November this year. It will be an interesting afternoon of presentations and discussions. You will be able to meet a wider group of our management and investment teams. We will also share deep dives into our businesses and cover our strategic road map for the coming years. With that, we wish you a very successful day, and we're looking forward to meeting you either later today for some of you or at the latest in November. Thank you very much for your attention and your questions today.

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.