InCore Bank Annual Report 2021

Download PDF: Annual Report 2021 (EN), Annual Report 2021 (DE)

Business review
In the 2021 financial year, the primary focus was on developing and expanding the main strategic business segments: full-outsourcing services, brokerage & global custody, digital assets, and payment services. Systematic expansion in these business areas, combined with positive market developments and the acquisition of numerous new customers, resulted in a 26.7% increase in AUC to CHF 10.5 billion and a 60% rise in sales. In the area of digital assets for B2B customers, InCore was able to establish itself as a major player in the Swiss market.

The marketing and sales activities bore fruit across the board. The customer base was expanded significantly, which helped to fuel the continuous growth of the company. In the area of full outsourcing, the platform go-live of Kaleido Privatbank Ltd, Zurich, was completed on schedule on July 1, 2021 after a very intensive six-month implementation project. Due to the integration of this additional full-outsourcing bank, operating income and other income increased accordingly.

Sales and earnings in the traditional brokerage & custody and FX segments were up significantly. This increase was due to the substantial growth in asset holdings in global custody and in cash holdings, as well as positive market developments and the acquisition of various new customers. The result from commission business and services rose significantly (+30.4%) to CHF 20.89 million (previous year: CHF 16.02 million). As a result of various specific measures and, in particular, passing on negative interest rates, a profit of CHF 0.12 million was generated from interest operations (previous year: CHF -0.13 million). At CHF 2.72 million, the result from trading activities was up considerably (+49.7%)on the previous year (CHF 1.82 million).

Good progress was also made in the digital assets segment. Various banks are already using this B2B service in live operations, and numerous other new customers are currently in the project implementation phase. The range of services in this area was also gradually expanded in the reporting year. With the successful launch of its own 24/7 online trading platform, InCore reached a major milestone in the reporting year.

In 2021, the most customer growth came in the payment services segment, which has evolved into a key area for InCore. Due to the many new customers for this service, various processes had to be adapted and expanded. In particular, transaction monitoring and the customer onboarding process were further improved with new tools and approaches, in order that adherence to anti-money laundering regulations continues to be ensured.

Other ordinary income increased by 39.0% to CHF 1.87 million (previous year: CHF 1.33 million) due to the implementation project for the new full-outsourcing customer, as well as projects with existing customers. However, general and administrative expenses were higher due to additional external costs.

To cope with this substantial growth and any associated operational risks, all areas were analyzed in detail and systematically expanded. At the same time, new positions were created and various new employees were recruited. As the basis for these measures, a new organizational model was developed, taking into account the needs within the business segments as well as current and future growth. Two new departments – «Customer & Partner Management» and «Financials, Risk Control, Legal & Compliance» – were formed to facilitate the management and running of the company. In addition, the basic structure was changed to a growth-based matrix structure. As part of this, new product managers were appointed for the individual business areas. They will also assume full responsibility for the processes in their departments. Due to the expansion of the business activities, personnel expenses increased by 10.9%to CHF 8.20 million (previous year: CHF 7.40 million). This growth also led to a corresponding increase in general and administrative expenses to CHF 11.49 million (previous year: CHF 9.51 million).

Net profit for the completed financial year 2021 came in at CHF 3.12 million (previous year: CHF 0.72 million), which corresponds to a significant increase of 333% on the previous year. This outstanding result, which can be attributed to the market cultivation efforts and the measures taken to improve operations, suggests that the company can look to the future with optimism.

Outlook
In the coming financial year, InCore will continue systematically expanding its business areas to support its evolution into a full service B2B transaction bank. InCore wants to position itself as one of the leading banks in the market, especially in the digital assets segment.

Building on what has already been achieved, the main focus in 2022 will again be on stepping up the sales activities and pushing ahead with the successful implementation of the strategy, while at the same time making sure the company is well positioned to overcome the challenges associated with major growth.

Numerous new customers in all areas are currently being onboarded, and the customer acquisition pipeline is also well filled. InCore’s solutions in the areas of digital assets and payment services in particular are attracting a great deal of interest within the market. However, there are also numerous prospects in the areas of full-outsourcing services and brokerage & global custody. The customer base is expected to continue growing strongly as a result of expanding the sales activities.

There are also plans to further expand the range of digital asset services in 2022. In addition, improvement measures are planned in all areas with the aim of keeping customer satisfaction at a high level.

To cope with the expected growth, the organization will be restructured on the basis of the new organizational model. The Executive Board will be extended by an additional member, who will be responsible for the area of Financials, Risk Control, Legal & Compliance. To avoid capacity shortages and greater operational risks, the work force will be rapidly expanded in key positions. Due to the expansion of the workforce, there are also plans to expand the office space in Schlieren / Zurich in 2022.

In light of this systematic expansion of InCore and the focus on further growth, we can expect the company to continue performing well in the coming financial year.
 

Peter Haist
Chairman of the Board of Directors

Mark Dambacher
CEO