VONN.SWVONN.SWSIX
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Operator: Ladies and gentlemen, welcome to the presentation of Vontobel's Full Year 2025 Results Webcast. I am Sandra, the Chorus Call operator. [Operator Instructions] and the conference is being recorded. [Operator Instructions] At this time, it is my pleasure to hand over to Christel Rendu de Lint. Please go ahead.
Christel De Lint: Good morning, and a very warm welcome from Georg, Jan and myself. Thank you for joining us today. Georg and I look forward to sharing the progress we have made on our strategic priorities as well as the highlights of our financial results. Jan Marxfeld, our CFO at Interim, will then take you through the detailed numbers, after which we will open the line and take your questions. 2025 was a successful year for Vontobel. We achieved strong financial results and made decisive progress on our strategic priorities. We reached a net profit of CHF 280 million. We delivered significant growth while at the same time, absorbing lower interest rates and a much weaker U.S. dollar. Assets under management increased to CHF 241 billion, supported by strong inflows in private clients and strong inflows for institutional clients in four of our six investment boutiques, notably in fixed income. Our capital position remains very strong. We closed with a CET1 ratio of 19.7%, thanks to record capital generation and effective resource management. We will propose a continued attractive dividend of CHF 3 per share. We made decisive strategic progress. First, we integrated our quantitative investment boutique into the broader investments organization. The tighter integration will accelerate ID generation insights and innovation. We also divested customer funding, a digital lending platform. We want to concentrate on our growth areas. Second, we captured organic and inorganic growth. In private clients, we hired new relationship managers in key markets and will open an office in Los Angeles to see strong client demand. We welcome the new employees and clients from IHAG Private Bank. This integration was a resounding success. It was completed ahead of schedule on the budget and with very positive client feedback. Meanwhile, our institutional client teams operate sharper, faster and higher on the value chain. They achieved standout flows in several flagship funds, secured a number of prestigious mandates. Third, our CHF 100 million efficiency program is running ahead of plan. We have structurally improved our cost income ratio and redeployed resources to growth areas. The program will be completed by the end of 2026. Let me now briefly recap the environment in which we delivered these results. Global bonds and equities gained though volatility remained high. Bond yields drifted down as both the SMB and the Fed cut interest rates. The Swiss franc appreciated sharply, driven primarily by safe haven demand. This environment created dual financial headwind for us. The lower interest rates weighed on our net interest income and the much weaker U.S. dollar reduced our foreign currency income. Yet, these conditions clearly played into the strength of our credit light investment-led model. We helped our clients diversify and invest with confidence. The proof lies in our strong net inflows and continued high client engagements. Our unique integrated investment model underpins our success and remains the foundation for our future growth. We are an active investment firm serving two complementary client segments, private clients and institutional clients. These are mutually reinforcing in skills and business and complementary in the diversification benefits. Both segments grow and rely on the expertise of our single factory, investment solutions and our dedicated experts. Our strategy is clear. We are doubling down on this model to realize its full potential. This will drive long-term value for our clients, employees and shareholders. I am now turning to private clients which delivered another year of strong growth. Operating income grew by 5%, supported by continued client demand for structured investment solutions. While we saw a brief slowdown in April, activity bounced back and stayed above historical levels for the rest of the year. We attracted net new money of CHF 5.8 billion with continued strong growth in developed and Western markets. This ranks us in the top quartile amongst peers. We win clients with our investment expertise not through leverage. We stick to our defining and successful approach using our investment know-how to grow in Western and developed markets, thereby generating steady recurring revenues. We are committed to building on this track record of steady growth. We will recruit and develop top caliber relationship managers and are excited about opening our Los Angeles office later in H1. We will further invest in our market-leading platform for structured investment solutions, thereby, expanding its capabilities. Finally, we will complement our organic growth with highly selective acquisitions. We have successfully acquired integrated many banks and most recently, the client book of IHAG Private Bank. This strong track record positions us to pursue further opportunities in key markets such as Switzerland, Germany and Italy. And now over to Georg.
Georg Franz Schubiger: Good morning, everybody and also from my side, a very warm welcome from Zurich. Last year, institutional clients net new money was minus CHF 1.6 billion. 3 years ago, outflows exceeded CHF 10 billion in 1 single year. So we made strong progress, but we are not yet where we want to be. Our ambition remains to grow institutional client flows by 4% to 6% through the cycle. In absolute terms, we want to generate annual net inflows of at least CHF 4 billion. First, I'll update you on where we stand in institutional clients. Then I will share the strategic actions that we are taking across our investments unit to drive our next cycle of growth. Over the past 18 months, institutional clients have executed the strategic measures we outlined at our Investors Day in 2024. These measures have sharpened and accelerated our distribution capabilities. We have introduced a new coverage model for integrated solutions. We replaced regionally different processes and systems with a fast and globally consistent client journey. We have reinforced our teams with senior hires in priority markets, particularly Asia. These changes are already yielding results. Our response times have improved, conversion rates have increased and our client relationships have deepened. The operational and financial results are clear. Several of our flagship funds have been exceptionally strong, have seen exceptionally strong inflows. This includes CHF 1.8 billion into credit opportunities and CHF 1.4 billion into emerging markets debt. We have won prestigious mandates. For example, one, is their CHF 600 million multi-asset mandate from the Auckland Future Fund Board. Vontobel emerged as the winner in a highly competitive selection process, including 21 participants. Our distribution strength is also evident when compared to peers. In 2025, Vontobel ranked in the top quartile for European institutional fund flows underlying our distribution effectiveness. These are tangible proof points that our strategy is working. Our disciplined execution is also driving tangible results across our investments unit, our factory that serves both private and institutional clients. After the so-called industry winter that started in 2022 for active and especially for emerging markets focused firms, the industry is now back in growth mode. And so is Vontobel 4 out of our 6 boutiques achieved strong investment performance, grew assets under management and attracted significant net inflows. These 4 boutiques delivered a combined net new money growth rate of 6.7% in 2025, well ahead of most active managers in our industry. By delivering strong performance and innovation across our boutiques, we attracted net inflows in every asset class. To accelerate the next phase of growth, we will continue to realign and expand our offering towards areas with attractive economics, strong anticipated client demand and demonstrated performance. First, we will launch new ancillary fixed income offerings that are already under development. This will build on the outstanding success of our flagship funds, including emerging markets that credit opportunities and strategic income. Second, we will expand our solutions offering. Third, we will scale our strong private clients and Swiss institutional clients multi-asset track record to a wider set of institutional clients. And fourth, we will raise the next fund in Ancala. For the remaining 2 boutiques, quantitative investment and quality growth, which have seen significant outflows, we have an equally clear strategy. This year, we completed a leadership transition at quality growth, ensuring continuity for a boutique founded in 1984. Quality growth continues to deliver stable double-digit returns, making it an attractive diversifier. The boutique has seen significant retail outflows. These were driven by the current focus on AI-driven mega cap stocks. Quality growth, however, continues to resonate with a set of institutional clients, they value the distinct and defensive style of quality growth. Style preference cycles can span years. Flows could therefore remain volatile. The boutique financials of quality growth are attractive. Our development resources will, however, be concentrated in fast-growing areas, mainly in fixed income solutions and private markets. Systematic investing has been challenged by stop and go macro conditions, and we no longer see pure systematic strategies as a growth area. Nevertheless, we will continue to serve existing clients and keep our capabilities in place. Going forward, we will focus our quantitative expertise on 2 priorities. Driving tailored solutions and supporting our fundamental investment teams. To make this shift, we are integrating the quantitative investment boutique into a central hub. This hub will eliminate overlaps and drive idea generation, insights and innovation across all our investment teams. We have already seen the benefits of this integrated approach. One example is this sustainable equity income plus. It blends our quantitative expertise and fundamental research to deliver outstanding results for our clients. This integration also positions us for the previously communicated insourcing of the Raiffeisen Futura funds in July 2027. Most of those assets are booked with this boutique today. This change will not impact any other areas of our long-standing and successful cooperation with Raiffeisen. And we continue to expect a minimal impact on the group profit. Now let's turn to our structured solutions business. It gives clients access to tailored investment solutions at scale. We combine customization, automation and scalability on a leading technology platform. Importantly, Structured Solutions has operated profitably in every single year for more than 20 years. That unbroken track record comes from our franchise being uniquely diversified. First, in terms of client types and channels, we work with external asset managers and banks, support our internal private clients and provide white label issuance services. We serve individual investors via exchange-traded products. Second, we maintain a balanced mix across 2 lines. Investment solutions and exchange solutions. Investment Solutions include yield-enhancing certificates and managed certificates. Exchange Solutions offer products such as warrants. This combination stabilizes overall revenues. Third, in terms of geography, We are the market leader in both businesses in Switzerland. We hold the second spot in Germany for leverage certificates. And we have profitable operations in select key European, Middle Eastern and Asian markets. We will continue investing in our leading technology to stay at the forefront of innovation for our clients. This will defend and expand our market share. And finally, we have substantially improved our efficiency over the past 3 years. Our cost/income ratio is structurally lower decreasing from 78.2% in 2023 to 72.9% in 2025. This underscores the progress of our efficiency program which is ahead of schedule with over 80% of the targeted savings already achieved. The efficiency gains have been driven by firm-wide initiatives including the consolidation of our IT infrastructure and applications, reductions in vendor spending and process automation. The program has allowed us to lower absolute costs while continuing to invest into our business and technology. We are currently implementing additional measures to build on this momentum. We remain fully committed to achieving the CHF 100 million in savings by the end of 2026 and embedding a lasting culture of cost discipline across the organization. Our objective remains clear. To deliver sustainable growth and create attractive returns for our shareholders through disciplined execution of our priorities. We are confident that Vontobel has the right strategy, the right business model and the right team to achieve our through-the-cycle targets. With this, let me hand over to Jan, our Interim CFO, to cover the financials.
Jan Marxfeld: Thank you, Georg. Good morning, and a warm welcome. 2025 was a successful year for Vontobel. We delivered strong financial results. We generated a profit of CHF 280 million, up 5% year-on-year. Profit before tax increased to CHF 364 million. As Christel mentioned earlier, we managed to navigate dual headwinds, CHF 34 million from lower interest rates that compressed our net interest income and CHF 27 million from currency translations into our reporting currency, the Swiss franc. The Franc significantly strengthened against the U.S. dollar and almost all other currencies. This matters because 37% of our operating income is in Franc's compared to 78% of our costs. Currency swings, therefore, have an impact on our reported profitability. But I'm pleased to report that our underlying profit grew by CHF 74 million, more than overcompensating these headwinds. The efficiency program achieved CHF 41 million run rate savings, while business growth contributed another CHF 33 million. Our reported results include one-offs of CHF 19 million, slightly lower than 2024. These are what we call cost to achieve related to the efficiency program and the IHAG client book integration expenses. We expect a cost to achieve of around CHF 18 million in 2026 to complete the program. On the tax line, we realized a lower effective rate than in 2024 due to the regional mix of taxable profits and the fading of last year's one-off impacts. We are maintaining our effective tax rate guidance of 22% to 23%. We closed the year with assets under management of CHF 241 billion, up 5% year-on-year. This increase was driven by positive net inflows and market performance, again, partly offset by currency headwinds. Net new money rose to CHF 4.2 billion, up from CHF 2.6 billion last year. Private clients delivered CHF 5.8 billion of inflows which is 5.2% annualized growth. This is certainly in the upper half of our through-the-cycle target range. 4 out of our 6 investment boutiques attracted solid net inflows. But the net outflows from our quantitative investment and quality growth boutiques more than offset these. The stronger Swiss franc also reduced assets under management by CHF 10.1 billion. This reflects the fact that 3/4 of our asset base is foreign currency denominated. Performance and other effects added CHF 17.6 billion. These predominantly include market gains. Furthermore, we have effects from the integration of the IHAG client book, the divestment of cosmofunding and our decision to stop developing certain service offerings. These are connected to the strategy and the next steps for the quantitative investment boutique, which Georg explained earlier. Turning to operating income. It increased 1% to CHF 1.4 billion. Setting aside the FX headwinds mentioned earlier, on a constant FX basis, our operating income grew 3%. Net interest income declined 30%, mainly due to the SMB's successive rate cuts throughout 2024 and in early 2025. Net fee and commission income grew 2% preliminary, reflecting higher average assets under management. Trading and other income increased 6%, mainly due to the strong client demand for structured solutions throughout the second half of the year. By segment operating income in private clients yet again grew strongly by 5%. This as lower interest income was more than offset by positive effects of higher asset levels and high client activity. Within institutional clients, operating income fell 7%. This is because of slightly lower assets under management and the tail end of shift away from emerging market products. Turning to Slide 20 and the Private Clients margin. Our recurring margin remained stable at 40 basis points throughout the year. Growth in the ultra-high network segment has put some pressure on the recurring margin. That is because larger clients typically deliver a somewhat lower margin, but this has been offset by revenue management and the launch of our new modular product offering. We saw continued strong margins in structured solutions. The 2 basis point of net interest compression is a direct consequence of the lower market interest rates. The transactional margin reflects a normalization and activity levels. As a reminder, this item includes client transactional revenues not related to structured products. In institutional clients, the overall margin declined 3 basis points to 34 basis points. This is a direct result of the prior period shift away from emerging market funds and mandates. In the years 2022 and 2024, industry-wide demand for emerging market products weakened. This compressed overall margins as EM-related products typically come with a higher margin. But in 2025, the share of emerging market assets flattened out at around 10%, marking the end of this headwind. Our gross flows have now turned clearly margin accretive. This reversal is supported by our continued pricing discipline and more importantly, the success we are enjoying with our higher-margin fixed income solutions and emerging market debt offerings. Moving to costs. Our CHF 100 million efficiency program is running ahead of plan and is delivering tangible results. By the end of 2025, we have already realized CHF 84 million exit rate savings. So with 66% of this 3-year program done, we realized 84% of the savings on an exit rate basis. Now if you look carefully at this slide, you will see that despite of what I just said, the costs are flat year-on-year. It is our efficiency program that enabled us to do so even as we reinvested for growth and our cost base includes CHF 90 million of one-off costs to achieve and the IHAG client book integration costs. We will see further benefits next year. Because all the efficiency measures we identified throughout this year will be fully reflected in our P&L of 2026. Coming to the all-important cost/income ratio. Year-on-year, this improved further to 74.2%. Another consideration is the one-off effects. Adjusted for the cost to achieve of the efficiency program and the IHAG implementation, our cost/income ratio was even lower at 72.9% this year. In summary, this means we are well on track for our below 72% targets. Now to another core strength of Vontobel, our balance sheet. It is fully market-to-market, and we hold around CHF 25 billion of liquid assets which is more than 70% of our total balance sheet. Our Structural Solution business is subject to conservative and highly effective risk management. This has again been proven during the market turmoil surrounding the so-called liberation Day in April. Our lending book remains deliberately small and conservative. It comprises CHF 2.1 billion of Swiss mortgages and CHF 5.9 billion of Lombard loans backed by liquid collateral. We apply strict underwriting standards and a robust risk management, keeping credit losses minimal. Earlier in the year, we issued our first CHF 200 million senior unsecured bond, which was met with high investor demand. This further diversified our funding base and demonstrates our strong market access. Overall, our liquidity is strong with a liquidity coverage ratio of 150%. Since listing in 1986, we have reported a profit every single year. This unbroken record underscores the strength of our conservative risk culture and the prudence of our balance sheet management. Vontobel has a very strong capital position. Our CET1 ratio stands at 19.7%, up 3.6 percentage points from a year ago and up 1 percentage point from 2023. Since then, our capital-efficient business model has allowed us to first, fund 2 strategically important acquisitions. Second, support business growth; and third, absorb the Basel III Final regulation impacts all while funding an attractive dividend every year. This development reflects exceptionally high capital generation and disciplined management of our risk positions. For example, under Basel III Final operational risk-weighted assets are now largely based on past operational losses because our operational losses are minimal or corresponding RWAs are low. Additionally, the previously communicated optimization measures played a role. These are now largely complete. Our CET1 ratio comfortably exceeds both the 8% regulatory minimum and our 12% internal targets. This capital position gives us the flexibility to support further organic and inorganic growth while sustaining attractive returns for shareholders. One of the special things about Vontobel is that we take a long-term approach to shareholder value generation. And we are creating shareholder value this year, but also every year since 2014. Our return on equity reached 12.2%, constantly above our estimated cost of equity of around 9%. This year, our tangible book value per share rose by 15% to 33.86, our strongest annual increase in more than a decade. Including dividends, tangible equity per share has grown over 200% since 2014, underscoring the compounding power of our capital-efficient investment-led model. In recognition of this robust capital generation and healthy profitability, the Board will propose a continued attractive dividend of CHF 3 per share for 2025. This is equivalent to a payout ratio of 60%, in line with our target of more than 50%. To summarize, we achieved significantly higher net profit offsetting both lower interest rates and FX headwinds. Asset under management grew by 5%, and we recorded improved net inflows. We are making good progress narrowing the cost/income ratio down towards our 72% target. And our balance sheet and capital positions remain very strong. We ended with a CET1 ratio of just below 20%. Taken together, these results demonstrate the strength of our business model, especially in the prevailing macro environment and the strategic progress we are making. With that, I hand back to Georg.
Georg Franz Schubiger: Thank you, Jan. 2025 was a successful year for Vontobel. We delivered strong financial results, enabling us to propose a continued attractive dividend of CHF 3 per share. We decisively advanced our strategic priorities. And we captured both organic and inorganic growth and our CHF 100 million efficiency program is ahead of plan. At Vontobel, we are determined to carry this execution momentum into 2026. Thank you for your attention. We are now happy to take your questions.
Operator: [Operator Instructions] Our first question comes from Daniel Regli from ZKB.
Daniel Regli: I have 4 questions, if I may. Ask all of them, please interrupt me if you want to limit the number of questions by analysts. The first question I have is on the margin and in institutional clients. And as you say, you have kind of flows have turned margin accretive by about 5 basis points difference inflows versus outflows. But can you give us kind of a rough impact of this kind of exit margin as of end of '25 versus the full year gross margin in institutional clients? Then the second question I have is regarding the net interest income in private clients H2 versus H1. And it seems like the net interest income shown in private clients is up in H2 compared to H1. However, the interest income on a group level was down H2 versus H1. So can you maybe explain to me when -- or what kind of interest income is allocated to the segment and what interest income remains in the corporate center. And then on the efficiency program, you said CHF 84 million was realized as an exit run rate. Can you give us a rough number what we already see in the cost line of CHF 25 million. And then the last question on the capital policy. Obviously, the capital looks very strong at 19.7%. So my question is a bit why didn't you choose a higher dividend? Or what do you plan to do with your capital, given the high capital ratio?
Christel De Lint: Thank you very much, Daniel, for your 4 questions. I'll take the first one, and Jan will go through to the next 3 questions. So as we've shown, indeed, the growth flows have turned margin accretive. It's very hard to give you an exact numbers on the exit rate, but you can see the evolution from '24 H1 '25 and H2 '25. I would also points to the outflows coming at a lower margin. Now the end results in a given year very much depends on the outcome in the market as well. So what have we seen last year, in particular, is returning demand on emerging markets, we've seen strong inflows into credit opportunities. These are all nicely merged segments the way it's starting off, you can expect the same type of flows. But of course, it honestly really depends on the way that the year pans out. I think the key message is to see that where we're growing, where we are strong. And in particular, in the fixed income space, this is not a low-margin plain vanilla treasury type of fixed income. It's the high value-added type of fixed income. So that's important to remember. I think the other part that is important to remember is the flattening out on the EM assets. One aspect was the industry winter in a sense for EM demand. That was not under control, and that seems to be now behind us. And there was, of course, an element of under performance, in particular, for quality growth EM. And that effect is behind us because the assets have literally gone to 0. On the other side, EM was very strong for us in fixed income over the past few years until 2022 and has shown that it will again be strong in the sense that this is a top well in the upper half of the top quartile across horizon. So that's kind of the full picture on margins. And now over to Jan.
Jan Marxfeld: Yes. So regarding your question of the allocation of the net interest income between PC and the Corporate Center. What I can tell you the way we do this, and we look at this is that we have an internal funding curve and PC they basically earn interest on the deposit side versus this funding cost. And they also an interest on the loan side compared to this funding curve. What remains in Corporate Center is basically a residual treasury income, which we don't allocate out. Regarding the CHF 84 million, exit rate reduction. I think you will capture this very correctly. So this is basically what we have identified over the program today. So in the years '24 and '25. And what is in our P&L is roughly 3/4 of this. This is basically the effects which materialized in 2024 and over 2025. And for the remaining, we obviously then we'll see this coming in, in 2026. Last question I think you had was on our capital and what we will do is this. So on the CET1 capital, 19.7%, at the moment, we feel that this is a very good spot to be in. And there are a couple of reasons for this. So one is definitely, we need capital to sustain our future growth. And this is organic and inorganic. So for example, the Ancala transaction in the mid- to long term, we will, as you know, acquire further shares or further part of Ancala. So that will certainly absorbed some of the CET1 capital. And lastly, there is upcoming regulation. This is on the background of the UBS, CS discussion, but might also have impact on smaller banks like us. And for this, we also would need capital if that materializes. The dividend, I think you also asked about the dividend. So the dividend it's obviously decided or proposed by the Board and decided by the AGM. It's important to remember that we have a through-the-cycle target of 50% payout ratio. We are there at 60%. So depending on growth and capital needs from the things we just explained, they will constantly evaluate this. .
Daniel Regli: Follow-up on the first question on the IC. Can you maybe give me kind of the gross outflow number versus the gross inflow number. So I can kind of calculate the impact from the numbers you've given me?
Christel De Lint: We'll take that offline with Peter afterwards, also in the interest of the other participants, if you don't mind. I think you already have the ballpark. But yes, yes, let's pick it up offline.
Operator: The next question comes from [indiscernible] from Octavian.
Unknown Analyst: I have actually 2 questions. Firstly, on the capital. So your 19.7 CET1 ratio. What I saw it was due to drop in the RWAs. You mentioned operational risk, but there was also a drop in credit risk RWA. So could you maybe give a bit more color on that and maybe more how it came to that precisely? And the second one, if you could elaborate on this CHF 1.1 billion of inflows to the Center of Excellence that you treat us institutional clients inflow so what kind of inflows are this exactly?
Jan Marxfeld: All right. So on your last question, on CHF 1.1 billion from the Centers of Excellence. So this is something these are institutional clients or clients of institutional in nature, which have besides transaction banking needs, they have also investment advice needs and therefore, they are booked in the corporate center. But for the presentation here, we thought it was appropriate to show them by their origin or the client segment. And we also did this in the half year, by the way, consistently. On the capital question, the 19.7%. So I think on the credit risk, RWA can say too much here. It's in line with the measurement approach that we used the standard approach and depends a bit on the composition of our loan book. Lombard loans have carried very low credit risk RWAs, I think operational risk you saw and then on the market risk we had the measures which I explained before.
Operator: Next question comes from Mate Nemes from UBS.
Mate Nemes: I have 2 of them please. The first one would be going back to institutional clients. It's really good to see good performance and inflows into 4 of the 6 boutiques. Yet you are still seeing some outflows for equities or namely the quality of growth boutique. Could you offer any color on what is your expectations with regards to those flows? Could we see a stabilization already in the first half of '26? Or this is just entirely dependent on yield curves appetite for quality growth, and so on? That's the first question. The second question would be going back to the jump in the CET1 ratio. And appreciate the color on operational risk also over that some of that has to do with market risk and tail risk hedges. My question is, should we expect a somewhat more volatile market risk RWAs going forward? Or this is a single onetime jump and this is a baseline from which on you'll develop simply along the lines of normal business volumes.
Christel De Lint: Thank you, Mate, for the question. To clarify, really, for all intents and purposes, quality growth is now a developed market boutique if you wish, the quality growth EM exposure is, as said, reduced literally to nothing. So that is not something that's featuring into any expectation or weighing into our results. Closing the topic of emerging markets. On the other side, it's very clear that appetite has returned from clients. As said, we saw the first green shoot on EM debt as we were standing here a year ago and that materialized the whole year. And we're also now seeing, I would say, green shoots and slightly more in EM equities. And there, our franchise in conviction equities mtx is benefiting. You've seen from the slide that one of the key prestigious mandate win from a U.S. Pension Fund was for this team in EM equities. So quality growth, the core franchises are U.S. equities and global equities. You're not, obviously, without knowing that the Magnificent 7, AI tech, et cetera, has had a predominant impact on market behavior and have therefore penalized any retail wholesale flows that was chasing performance. So it is dependent on client appetite and market because what we're seeing is the interest on the other side of institutional clients, those who really look to diversify to construct a book of business that is diversified across investment approaches, et cetera, they actually are seeing as we speak, if you want, because that is obviously a distinctive approach. Hard to forecast strong investment process, value profitable for us. So that's where we're standing right now as we look at it. But EM is not the factor for quality growth. In capital for -- Jan?
Jan Marxfeld: So on the market risk RWAs and whether or not this is volatile. So I think probably it helps just to reflect 1 second on the structured solutions business itself. So this is margin-driven business, which is clearly depending on client activity, which again then is fueled by healthy volatility of the markets and sentiment around that. So it's deliberately not position taking. So therefore, I would expect the RWAs, they are being more or less flat. And we have done the optimizations. So certainly not going down from here. We have, obviously, a hedging arsenal already and a prudent risk management, which just was exemplified in the turmoil after the Liberation Day. So I would steer you towards a flattish -- somewhat flattish RWS there.
Operator: [Operator Instructions] The next question comes from Nicholas Herman from Citi.
Nicholas Herman: I've got a few, but I'll start with 3, and I might circle back if that's okay, later. Just can I just continue the line of questioning on institutional clients, please? Encouraging, but not a surprise to see, I guess, your EM assets stabilize given strong markets. I'm interested, could you just talk about the pipeline there? And more broadly, do you see this as being investors just addressing under allocations? Or -- and I guess even more broadly than that, do you see this as well as the start of a structural reverse of a shift away from global back towards local. I would love to hear your thoughts on what your clients are telling you. Sticking with IC, I was a little surprised to see equities AuM shrink by 10% half-on-half despite clearly very strong equity markets. Just why was that AuM build so weak in Q4? And could you please segregate that between investment performance and flows? And then finally, private client margins. How do you see the outlook for recurring margin? And I guess I ask that in the context that you mentioned some revenue management actions and the launch of a new modular product offering. Could you give some more details on these, please, and the impact on the benefit that those have driven to your P&L?
Jan Marxfeld: Yes. Thank you for the questions. We had great difficulties to understand your first 2 questions. So maybe you can repeat them, but we got the third one. So I will respond to that. This was about the recurring PC margins and revenue management in case we understood that right? Yes, listen, there is always pressure on those margins, right? There's overcapacity in the industry. So we constantly need to ask ourselves and take action in terms to defend those margins. Secondly, with the strategy we announced a few years ago to do more in the ultra space that also has put certain pressure on the margin. So therefore, we mentioned last time that we have done 2 things. We have introduced a new modular product offering combined with rollout that was focusing on revenue management or pricing as you can also call it. And I think the combination of these things has been allowing us to keep the margins very stable at 40 basis points, while the overall industry is struggling. This is a very big focus point of ours because we -- as I said, we don't just need to compensate for a certain book transformation towards some of the larger clients and it's a little bit away from the small and very small clients. Secondly, we also need to compensate the general industry development. Now if I may ask you to repeat your question number 1 and 2. So we can...
Nicholas Herman: Can you hear me okay?
Christel De Lint: Yes.
Nicholas Herman: So the first two questions that I had were on institutional clients. So the first part was on EM. And could you talk about the pipeline there in the context of very strong EM markets? And more broadly, is this investors just starting to kind of address some underweight allocations? And are they -- is it -- and do you see this as well as the beginning of a structural reverse of the shift away from local towards global, are we going back towards local away from global because that's been a long-term structural shift for a long time. And I would just love to think your clients are telling you there. And then the other part on IC was, I think equities AuM shrank by 10% in the half despite very -- clearly very strong equity markets. Could you please disaggregate the moving parts there between investment performance and markets and net new money, please?
Christel De Lint: Sure. So on EM on the pipeline, it's very clear that the client engagement is strong on that. And so it's followed the packing order that we'd expect, right, in terms of moving up the risk ladder. So starting with EM debt and now moving into EM equities. So for us, we've seen the flows materialize tangibly in EM debt, and you've seen them on the presentation through the funds. We've seen the interest also starting to materialize, and you've seen that mandate for mtx, and we're seeing the interest. So I think it's a bit of both, to answer your question. They go together, right? So the valuations were extremely stretched if you look about 6 months ago. And going back to 2021, 2022, there was really a sense among the investors community that suddenly, EM, it started with China, but then EM was on investable. And that was kind of, I guess, always questionable, right, is 50% of the GDP of the world is investable -- uninvestable. So we're seeing both, it's just -- looking at the stretch valuation, looking at the underweight allocation and the discussions around diversification around the dollar also play a role. So it's -- that probably -- that part is bigger than it historically was. In terms of the equities, it's been -- indeed, there are moving parts. And there, Peter can walk you through what you've seen has worked very well for us is the Swiss equity part has grown through the sustainable equity income product. The other franchise have stabilized to slightly up. So that's impact for us. It's empty emerging market equities and quality growth is the part that has suffered in terms of outflows, as we've mentioned, the EM having come to an end, if you want now by the end of last year pretty much.
Operator: Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Christel Rendu De Lint for any closing remarks.
Christel De Lint: Thank you all for joining us today and for your questions. We appreciate your continued interest in Vontobel. Should you have any additional questions, please do not hesitate to reach out to our Investor Relations team. We look forward to seeing you latest at our AGM in April. Until then, we wish you a successful day and a great finish to your week. Thank you very much.
Operator: 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.