Metzler had a good year in 2023 – and started off strongly in its anniversary year 2024

• Net commission income stood at EUR 180 million – growth in wealth management
• Net interest income rose from EUR 15 million to EUR 24 million
• Core capital was increased by another EUR 20 million – the core capital ratio was well above 20 percent
• The enhanced corporate strategy is currently being successfully implemented

“We are satisfied with the business performance of our company in 2023. This is particularly so when looking at last year's market environment, which was characterized by geopolitical uncertainties, the central banks' continued focus on fighting inflation and a subdued economic outlook. These developments were reflected in a challenging capital market. Nevertheless, our four business areas Asset Management, Capital Markets, Corporate Finance and Private Banking have developed positively. In some cases, our expectations were even exceeded. We are particularly pleased with the very good performance of our Private Banking and Asset Management divisions. This underlines our strong position in Germany in asset management for discerning private clients and institutional investors,” says Gerhard Wiesheu, CEO of the Frankfurt-based private bank B. Metzler seel. Sohn & Co. Aktiengesellschaft.

The business figures for the past year showed very pleasing performance, e.g. net interest income, which was significantly better than forecast. Net commission income reflected the positive performance of the bank's asset management units. Both Private Banking and Asset Management, in particular Pension Management, recorded growth and positive contributions to earnings. Adjusted for the transaction result, net fee and commission income was therefore significantly higher than expected. A decline was recorded only in transaction-related commission income. The generally sharp decline in the M&A market and the largely unfavorable environment for capital market transactions made themselves known here.

The bank's overall positive business performance is continuing in 2024. The first three months of the current year have already exceeded expectations. “We have started the new year with great momentum and are looking at the coming months with confidence,” says Wiesheu. “We see promising opportunities in areas like Asset Management and Private Banking that we intend to exploit for further growth.” The bank is also very optimistic about transaction business in the Corporate Finance and Capital Markets divisions due to the numerous projects it has won and ample trading volumes in direct business.

Looking at 2024 and into the future, the challenges in the capital markets will likely remain complex. This applies, for example, to ongoing geopolitical uncertainties, a slowdown in global economic growth, and the upcoming US elections in the fall. At the same time, however, there are also positive developments, Wiesheu explains. A turnaround in interest rates is imminent due to falling inflation and should improve overall growth prospects in 2024. In addition, technological advances, for example in automation or artificial intelligence (AI), will lead to productivity increases in the economy.

Wiesheu adds, “The course has been set for further growth. We enhanced our strategy from a position of strength in 2023. We are now consistently implementing this strategy with strong tailwinds – always with a focus on long-term, sustainable growth. With this in mind, we have decided to increase our already-strong equity capital base by another EUR 20 million.” 

The enhanced strategy dictates that Metzler Asset Management will focus on its strengths: active portfolio and risk management for institutional and wholesale clients. Metzler Asset Management has grown strongly in recent years, particularly in the area of fundamental and rule-based multi-asset strategies. Capacities are therefore being pooled within a multi-asset solutions team that also draws on fixed income expertise. In the equities segment, the focus is on dividend, growth and small-cap strategies. ESG integration, which is subject to high standards and implements individual client requirements, will continue to be implemented in all fundamentally managed products. Metzler Asset Management is also expanding its offerings to include real assets and has thus entered into a partnership with an investor and service provider specializing in alternative investments in the fast-growing area of infrastructure equity. Metzler Pension Management has become one of Germany’s top three providers of pension funds and CTAs by volume and acts as a reliable partner for capital-backed company pension schemes. This strong position is to be expanded further. Various options are currently being examined in order to broaden the range of pension management services.

Metzler Capital Markets has already made targeted investments this year along the value chain for its equities and fixed income services, including the recruitment of highly qualified staff. Further expansion is planned. In the first few months of this year, there has already been greater activity along the aforementioned value chain than in the previous year. This has included a high level of new admissions in equity coverage, brisk capital market business, and very good trading volumes – especially due to increased efforts to acquire new clients. The Corporate Solutions department also recently assisted ABO Wind AG with its successful bond issue as sole global coordinator and joint bookrunner.

Metzler Corporate Finance is continuing its successful growth trajectory in 2024 based on a focused sector strategy. For example, a highly experienced and renowned Managing Director was hired in April of this year to expand the healthcare sector. In addition, due to a change in attitude among family entrepreneurs towards company sales and several upcoming succession scenarios, Corporate Finance is experiencing strong demand for specialized M&A consulting. This is reflected in the high number of attractive mandates and, supported by a stabilized overall economic picture, it underlines the positive business outlook for the current financial year and beyond.

Metzler Private Banking will continue to see high demand for its services in 2024. This is reflected in the acquisition of new clients and positive net inflows. This business division will also be further strengthened in terms of personnel as the number of employees is set to increase continuously in the current year. The opening of Metzler Private Banking's Berlin office is also going well. A branch manager has already been found and additional staff are currently being onboarded. The search for a property has got off to a successful start.

With further strengthening of the capital base, traditionally strong and stable liquidity, and a long-term business model, the Metzler Group believes it is very well equipped for its 350th year. The anniversary year has been appropriately titled “Focus Future”.

Key figures for financial year 2023

Consolidated net profit for the year remained unchanged at EUR 2.3 million. Net commission income declined moderately from EUR 194 million in the previous year to EUR 180 million. This was due primarily to a decline in transaction-related commission income as a result of the challenging capital market environment and generally weaker performance on the transaction market. By contrast, net interest income increased significantly to EUR 24 million in the reporting year, compared to EUR 15 million the previous year.

At EUR 188 million, general administrative expenses at group level were below the previous year's level of EUR 192 million. Personnel expenses for the approximately 800 employees amounted to EUR 125 million, compared to EUR 127 million the previous year, which was partly due to a slight decrease in the number of employees. At EUR 63 million, other administrative expenses were below the previous year's level of EUR 65 million due mainly to office and IT costs.

The group's total assets amounted to EUR 9.9 billion, compared to EUR 8.3 billion the previous year. Bonds and other fixed-income securities increased significantly from EUR 460 million the previous year to EUR 1,126 million as of December 31, 2023 due to asset liability management. The portfolios are generally managed in such a way that they remain immune to interest rate risks. Therefore, write-downs did not play a role here. The fiduciary position amounted to EUR 6,887 million in the reporting year after EUR 5,257 million the previous year. This consisted almost exclusively of managed pension fund mandates that have increased in number due to new client acquisitions and are subject to fluctuations in market value.

The fund for general banking risks was increased to EUR 100 million, which represented a rise of EUR 20 million compared to the previous year. As in the previous year, the group's reported equity amounted to around EUR 197 million. Overall, the equity components disclosed in the consolidated balance sheet amounted to EUR 297 million, compared to EUR 278 million the previous year.

The Metzler Group's regulatory capital continues to significantly exceed the minimum requirements and consists exclusively of core tier 1 capital. With a core capital ratio of well over 20 percent, Metzler believes it is well equipped to meet existing and future regulatory requirements.

The performance of the business areas

In the Asset Management division, total assets increased from EUR 69 billion the previous year to EUR 70 billion by the end of 2023. The markets had contrary effects on the volume managed by Metzler Asset Management. Due to a change in the interest rate situation, many investors increased their strategic bond allocations and increasingly set up new mandates in this segment. The Asset Management division benefited significantly from this. New bond mandates with a volume of almost EUR 1 billion were launched last year. Equity investments tended to be reduced, which led to moderate corresponding outflows.

Metzler Pension Management acts as a central solution provider in the area of company pension schemes backed by capital and develops customized solutions for company pension schemes and working time accounts. As of the balance sheet date, Metzler Pension Management worked with over 780 companies, a continuous increase on the previous year, with over 100,000 individually managed pension relationships. This resulted in investments for the account and risk of employees and employers of over EUR 16.2 billion, compared to EUR 14.5 billion the previous year.

In the Capital Markets division, the popularity of dividend-bearing securities remained high in a challenging market environment with a significant decline in transaction volumes. Commission income remained constant in 2023. However, new client growth accelerated significantly again compared to the previous year.

The Research department continued to expand its client base in 2023. Targeted investments were made in high-potential young employees in order to further strengthen analytical support for German growth industries. Acting as a link between German companies and institutional investors from Germany and abroad, this department plays a central role in the broader range of services offered in the equity and bond markets.

Despite the persistently difficult capital market environment, the Corporate Solutions department successfully concluded many transactions, including several capital increases and bond issues. In cooperation with Crédit Agricole CIB, the department supported the IPO of Thyssenkrupp Nucera AG & Co KGaA, among others.

Currency Management continued to grow thanks to mandates from institutional investors both in the domestic market and in the foreign target market Japan. In Germany, the volatility of the interest rate differential to the US dollar area and the dynamics on the forex market led to increased demand for professional and proven currency hedging strategies. Following the good result the previous year, the “FX Protected Carry” strategy, which is geared towards absolute returns, also closed 2023 with a very pleasing result.

A significant contribution to last year's overall result was made by forex trading, which developed flexible collateral solutions for institutional investors in addition to supporting international corporate clients.

The Corporate Finance division won a large number of new projects in various sectors in 2023, e.g. Industrials and Technology as well as Alternative Energy. This division therefore performed well, particularly against the backdrop of a very subdued overall M&A market. Metzler Corporate Finance worked for family-owned companies, financial investors and international groups on both the sell and buy sides.

For example, the shareholders of Planet AI GmbH, a specialist for AI solutions in the field of intelligent document processing and analysis, were advised on the sale of 51 percent to the listed company Bechtle AG. Corporate Finance also advised the shareholders of Intelligix IT-Service GmbH on the sale of its shares to a private equity investor. Intelligix is a leading developer and provider of modular ERP software. Metzler Corporate Finance sold 100 percent of the shares to Horn & Company Group GmbH, a portfolio company of Waterland Private Equity Investments, on behalf of the owners of the strategy consultancy ConMoto Strategie & Realisierung GmbH.

The Private Banking division developed very positively in 2023, continuing its long-term growth trajectory. Steady inflows of client assets ensured a further increase in assets under management. Customer loyalty remained high, primarily due to the many years of support provided by experienced employees.

Unlike in previous years, a large portion of the performance on the equity market in 2023 was concentrated on a small number of individual stocks. This was successfully exploited for client portfolios through targeted individual stock picking. Interim geopolitical or economic uncertainties were cushioned by defensive positioning in the client portfolios. On the bond side, Metzler Private Banking took advantage of the rise in yields over the course of the year to extend the duration of client portfolios.

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