Annual Report 2018

Annual Report 2018 “If you choose to sail upon the seas of banking, build your bank as you would your boat, with the strength to sail safely through any storm.” Jacob Safra (1891 – 1963) Contents Group Chairman’s Foreword ——— 6–7 Market Environment Corporate ——— Governance Report of the 20 – 21 ——— Board of Directors 24 – 31 ——— Year in Review 12 –13 ——— 16 –17 Consolidated Address List Financial Statements ——— ——— 112 – 113 40 – 77 Corporate Governance ——— 24 – 31 Group Companies ——— 34 – 37 Sustainability Report ——— 80 – 109 Endurance Group Chairman’s Foreword Oak Tree | “Quercus” Group Chairman’s Foreword Welcome to the Annual Report of J. Safra good global governance further reinforce the region’s Sarasin Group for 2018. Once again we ecosystem which we are part of. delivered robust results, particularly in the This Swiss bedrock is synonymous with the strength of context of geopolitical uncertainty and a our Group. We remain naturally prudent and are privi- global economic slowdown. Our strong leged to be able to take a long-term perspective thanks performance is testament to our founding to no competing voices or interests. We regularly rein- vest into equity capital, adding to the Group’s stabil- principle: “If you choose to sail upon the ity. The Group’s shareholders’ equity stands today at seas of banking, build your bank as you CHF 5.1 billion, making J. Safra Sarasin one of the best would build your boat, with the strength capitalised banks in Switzerland. to sail safely through any storm.” I have had the privilege of witnessing many different economic cycles, and steering our Group through chal- In the second half of 2018 the storm clouds gathered, lenging environments. The world today may seem par- with the global economy entering the late stage of the ticularly perturbed by competing visions of how govern- business cycle and the transition by global central ment should be conducted, of how economies should banks to a less accommodative monetary policy. be regulated and of how the financial sector should act more responsibly. Broader challenges such as climate Against this backdrop, Switzerland remains the best change and the increasing digitalisation of services and country from which to operate a global private bank. society impact all people and sectors across the world. Political neutrality, economic competitiveness, low gov- ernment debt, a reliable legal system and a safe-haven However, it is at times of greatest stress that human- currency, all provide a bedrock of stability. The presence kind also shows the most resilience and ingenuity to of international organisations and forums dedicated to learn and take different paths to progress. Within each 6 | J. Safra Sarasin Holding Ltd., Annual Report 2018 Group Chairman’s Foreword challenge exists an opportunity. As bankers, we are to sustainability. Trees are universally recognised as a uniquely positioned to analyse the world and identify core part of the planet’s ecosystem. They also repre- favourable circumstances for our clients. sent a continual cycle of renewal across generations, whatever the environmental conditions. Different spe- This brings me to a guiding principle of banking: if you cies of trees symbolise distinct qualities, many of which look after your clients carefully, and nurture your staff, exemplify our approach to wealth management – such then everything else falls into line. When you lose sight of as endurance, protection, wisdom and renewal. what is best for your clients or for your staff, then you en- danger the very essence of banking: trust and reputation. Our core focus has always been, and will continue to be, on our clients and their future generations. We carry out Our Group’s longevity is also due to simplicity through wise this role with pride and passion. So long as we continue and considered investment, as well as a clear understand- to focus on your needs, then we will do our job properly ing of our evolving environment. Deep involvement, risk and prosper together. management, tight controls: these are trademarks of the consistent way we run the Group. At its heart, wealth man- I would like to thank all our clients and employees for agement is a simple business – focusing on risk-adjusted their trust and their significant achievements in 2018. I performance, but also ensuring good service, knowing your am confident that the Group has the scale and strengths clients, and thinking about them all the time. to ensure consistent performance in the years ahead. In 2019 we are celebrating 30 years since the Group Every bank is like a child – you have to nurture it so it is conducted the first ever sustainability investment ana- able to grow and thrive. lysis of a company. Sustainability is at the heart of the Group’s philosophy, and we continue to be a global lead- Joseph Y. Safra er in this investment approach. This year we have cho- Chairman of the Board of Directors sen the theme of trees to illustrate our commitment J. Safra Sarasin Holding Ltd. J. Safra Sarasin Holding Ltd., Annual Report 2018 | 7 Consolidated Key Data 2018 2017 Consolidated income statement CHF 000 CHF 000 Operating income 1,209,223 1,187,285 Operating expenses –671,673 –650,797 Operating profit 537,550 536,488 Consolidated profit 347,264 315,261 31.12.2018 31.12.2017 Consolidated balance sheet CHF 000 CHF 000 Total assets 35,230,892 35,170,035 Due from customers 13,904,706 13,687,354 Due to customers 26,848,174 26,107,696 Equity 5,119,114 4,792,113 2018 2017 Ratios % % Cost-income ratio 55.5% 54.8% CET1 ratio 31.8% 28.8% 8 | J. Safra Sarasin Holding Ltd., Annual Report 2018 Consolidated Key Data 31.12.2018 31.12.2017 Assets under management CHF million CHF million Assets under management 164,609 170,019 Headcount (full-time equivalents) 31.12.2018 31.12.2017 Consolidated headcount 2,151 2,155 Assets under management by booking centre Headcount by location (CHF billion) 31. 12. 2018 (full-time equivalents) 31. 12. 2018 17.5 18.8 279 125 44.9 83.4 599 1,148 Total 164.6 Total 2,151 Switzerland Switzerland Europe (excluding Switzerland) Europe (excluding Switzerland) Asia Asia Other Other J. Safra Sarasin Holding Ltd., Annual Report 2018 | 9 Adaptability Report of the Board of Directors Willow | “Salix” Report of the Board of Directors We are pleased to report another solid Thanks to this ownership and its financial strength, performance in 2018 for the J. Safra J. Safra Sarasin continues to play a leading role in the ongoing industry consolidation. During 2018 we wel- Sarasin Group, particularly in the con- comed clients and colleagues from Bank Hapoalim in text of worsening economic fundamen- Luxembourg and Switzerland, and we were delighted to tals and a decline in risk appetite. This announce the return of our physical presence to Israel. year’s robust results are a testament to the In 2018, J. Safra Sarasin was proud to join the UN Global Compact Network in Switzerland. J. Safra consistent revenue generation of our core Sarasin was also honoured to receive Global Finance business, and the prudence with which magazine’s “World’s Best Private Bank for Social Re- we manage the Group. We are proud to sponsibility” award, a trusted standard of excellence. be ranked amongst the leading banks of These have been new milestones in our journey in sustainability which we began 30 years ago. Switzerland1, and to be recognised glob- ally as an employer of choice. Capital strength and risk management J. Safra Sarasin Group is ranked as the 5th largest banking group in Switzerland by Tier 1 capital, the Client focus remains central to our success. We are ultimate measure of a bank’s financial strength, privileged to accompany many clients across genera- holding more than twice its regulatory requirements tions as they build patrimony that requires careful stew- with a CET1 ratio of 31.8%2. ardship. That is why we are very selective in the talent A sound capital base is the foundation stone needed we hire, the businesses we acquire, and the manner in for a global private bank. This philosophy is also reflect- which we integrate people into the culture of a family- ed in the conservative structure of the Group’s balance owned private bank. sheet, which maintained a high level of liquidity. The Group deploys ample resources to manage increasing regulatory requirements and a challenging market environment, in combination with a proven risk management approach. Assessment reviews are conducted on a regular basis. The Group’s comprehensive approach to risk management is detailed in the notes to the consolidated financial statements. Robust results in 2018 Client assets under management reduced slightly to CHF 164.6 billion as client net new assets of CHF 4.7 billion were offset by negative market performance. 1) The Banker Top 1000 World Banks July 2018. 2) Capital adequacy disclosures under FINMA Circulars 08/22 and 16/1 are published on our website www.jsafrasarasin.com. 12 | J. Safra Sarasin Holding Ltd., Annual Report 2018 Report of the Board of Directors Operating income increased by 2% to CHF 1,209.2 Outlook 2019 million in 2018 compared to 1,187.3 million in 2017. As we enter 2019, the geopolitical climate and eco- Despite a challenging environment during the second nomic environment remain volatile and challenging in half of the year, this overall increase and in particular many parts of the world. Public distrust of several insti- the 3% rise in net commissions and fee income are a tutions remains high. All sectors continue to face dis- testament to the strength and dependability of our core ruption from digitalisation, amidst the growing role of wealth management services.

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