Liechtenstein-based VP Bank said it recorded a net income of SFr17.2 million (around $18.8 million) in 2010, down sharply from 2009 when the figure was SFr59.8 million. The fall was driven by adverse exchange rate movements and low interest rates.

Total net operating income declined by 18.2 per cent from SFr313.8 million to SFr 256.8 million. Due to low level of interest rates, income from the interest-differential business fell by 34.8 per cent to SFr78.9 million, it said in a statement.

“We achieved this result under challenging circumstances. It is a reflection of the persistently low level of interest rates and the uncertainties surrounding the cross-border asset management business,” said chief financial officer of VP Bank Group, Fredy Vogt. “The strong Swiss franc versus the euro and [US] dollar, as well as the related misgivings about future developments in the economy and financial markets, also had a negative impact on earnings,” Vogt added.

Operating expenses declined versus the previous year by 3.0 per cent to SFr179.5 million. At the end of 2010, VP Bank Group employed a workforce of 727.2 (expressed as full-time equivalents), a rise of 1.0 per cent.

The cost/income ratio stood at 69.9 per cent, a significant increase versus the previous year (2009: 59.0 per cent).

The bank logged a net inflow of new money in the second half of 2010, offsetting the net outflow recorded in the first semester of the year (total for 2010: SFr100 million net new money inflow). Total client assets ended the year at SFr40.8 billion.