Vontobel Holding AG

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 Marksveld, our CFO at Intrim, 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 Fontobo. We achieved strong financial results and made decisive progress on our strategic priorities. We reached a net profit of 280 million Swiss francs. We delivered significant growth while at the same time absorbing lower interest rates and a much weaker US dollar. Assets under management increased to 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 3 CHF per share. We made decisive strategic progress. First, we integrated our quantitative investment boutique into the broader investments organisation. The tighter integration will accelerate idea generation, insights and innovation. We also divested Cosmo 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 seize strong client demand. We welcomed the new employees and clients from eHike 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 and secured a number of prestigious mandates. Third, our 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 S&B and the Fed cut interest rates. The Swiss franc appreciated sharply, driven primarily by safe haven demand. This environment created a dual financial headwind for us. The lower interest rates weighed on our net interest income, and the much weaker US 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 engagement. 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 their diversification benefits. Both segments draw 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 not 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 5.8 billion Swiss francs, 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-calibre 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 and integrated many banks and most recently the client book of EHAG 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.

Good morning everybody and also from my side a very warm welcome from Zurich. Last year, institutional clients' net new money was minus 1.6 billion. Three years ago, outflows exceeded 10 billion in one 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 4-6% through the cycle. In absolute terms, we want to generate annual net inflows of at least 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 has 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 seen exceptionally strong inflows. This includes 1.8 billion into credit opportunities and 1.4 billion into emerging markets debt. We have won prestigious mandates, For example, one is the 600 million multi-asset mandate from the Auckland Future Fund Board. Fontobel 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, Fontobel 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 Fontable. Four out of our six boutiques achieved strong investment performance, grew assets under management, and attracted significant net inflows. These four 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 debt, 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 Ankala. For the remaining two 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 two 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 Swiss 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 longstanding 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 two 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 leveraged 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 three 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 programme 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 100 million in savings by the end of 2026 and embedding a lasting culture of cost discipline across the organisation. 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 Fontable 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.

Thank you Georg. Good morning and a warm welcome. 2025 was a successful year for Fontobel. We delivered strong financial results. We generated a profit of 280 million Swiss francs, up 5% year-on-year. Profit before tax increased through 364 million. As Crystal mentioned earlier, we managed to navigate dual headwinds. 34 million from lower interest rates that compressed our net interest income and 27 million from currency translations into our reporting currency, the Swiss franc. The franc significantly strengthened against the US dollar and almost all other currencies. This matters because 37% of our operating income is in francs compared to 78% of our costs. Currency swings therefore have an impact on our reported profitability. But I am pleased to report that our underlying profit grew by 74 million. more than overcompensating these headwinds. The efficiency program achieved 41 million run rate savings, while business growth contributed another 33 million. Our reported results include one-offs of 19 million, slightly lower than 2024. These are what we call costs to achieve related to the efficiency program and the eHA client book integration expenses. We expect a cost to achieve of around 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 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 4.2 billion, up from 2.6 billion last year. Private clients delivered 5.8 billion of inflows, which is 5.2% analyzed growth. This is firmly in the upper half of our through-the-cycle target range. Four out of our six 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 10.1 billion. This reflects the fact that three quarters of our asset base is foreign currency denominated. Performance and other effects added 17.6 billion. These predominantly include market gains. Furthermore, we have effects from the integration of the IHA client book, the divestment of COSMO funding, 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 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 S&B'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 and private client 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 shifts away from emerging market products. Turning to slide 20 and the private clients margin. Our recurring margin remains 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 two basis point of net interest compression is a direct consequence of the lower market interest rates. The transactional margin reflects a normalization in activity levels. As a reminder, this item includes client transactional revenues not related to structured products. In institutional clients, the overall margin declines three 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 growth 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 100 million efficiency program is running ahead of plan and is delivering tangible results. By the end of 2025, we have already realized 84 million exit rate savings. So with 66% of the three-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 here and here. It is our efficiency program that enabled us to do so, even as we reinvested for growth, and our cost base includes 90 million of one-off costs to achieve and the eHack 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 eHAG 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% target. Now to another core strength of Fontobel, our balance sheet. It is fully market to market and we hold around 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 2.1 billion of Swiss mortgages and 5.9 billion of Lombard loans backed by liquid collateral. We apply strict underwriting standards and robust risk management, keeping credit losses minimal. Earlier in the year, we issued our first 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. Fontobel 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 two 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, our 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 target. This capital position gives us the flexibility to support further organic and inorganic growth while sustaining attractive returns to shareholders. One of the special things about FONTOBLE 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%, comfortably 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 3 francs 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.

Thank you, Johan. 2025 was a successful year for Fontable. We delivered strong financial results, enabling us to propose a continued attractive dividend of 3 francs per share. We decisively advanced our strategic priorities. And we captured both organic and inorganic growth. And our 100 million efficiency program is ahead of plan. At Fontobel, we are determined to carry this execution momentum into 2026. Thank you for your attention. We are now happy to take your questions.

We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue you may press star and 2. Participants are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and 1 at this time. Our first question comes from Daniel Regli from ZKB. Please go ahead.

Yes, good morning. Thank you for your presentation and for taking my questions. I had four questions if I may ask all of them. Please interrupt me if you want to limit the number of questions by analyst. So 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 five 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. 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 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 25 million? and then the last question on the capital policy obviously the capital looks very strong at 19.7 percent so um 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 thanks

Thank you very much, Daniel, for your four questions. I'll take the first one and Jan will go through the next three 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 rates, but you can see the evolution from 24 H1 25 and H2 25. I would also point to the outflows coming at the 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 treasuries 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 underperformance in particular for quality growth EM and that effect is behind us because the assets have literally gone to zero. 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 So that's kind of the full picture on margins. And now over to Jan.

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 curve and they also earn interest on the loan side compared to this funding curve. What remains in corporate center is basically residual treasury income, which we don't allocate out. Regarding the 84 million exit rate reduction, I think you captured 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 three quarters of this. This is basically the effects which materialized in 2024 and over 2025. And for the remaining, obviously, then we'll see this coming in in 2026. Last question I think you had was on our capital and what we'll do with this. So on the CET1 capital 19.7, at the moment we feel that this is a very good spot to be in. there are a couple of reasons for this so one is definitely we need a capital to sustain our future growth and this is organic and inorganic so for example the ankala transaction in the mid to long term we will as you know acquire further shares or further parts of ankala so that will certainly absorb some of the ct1 capital And lastly, there is upcoming regulation. This is on the background of the UBS CS discussion, but might also have impacts on smaller banks like us. And for this, we also would need certain capital if that materializes. The dividend, I think you also asked about the dividend. So the dividend is 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.

Can I ask a quick follow up on the first question on the IC? Can you maybe then 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?

We'll pick that up 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 yeah, let's pick it up offline.

Okay, thanks.

Thank you very much.

The next question comes from Karl Mordovsky from Octavian. Please, go ahead.

Good morning and thank you for taking my question. I have actually two 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 RWAs. So could you maybe give a bit more color on that, maybe more, Paweł, how it came to that precisely. And the second one, if you could elaborate on this 1.1 billion of inflows to the center of excellence that you treat as institutional clients inflows. So what kind of inflows are these exactly?

All right, so on your last question, the 1.1 from the Centers of Excellence. So this is something, these are institutional clients or clients of institutional 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 use, the standard approach. and depends a bit on the composition of our loan book. Lombard loans have carried very low credit risk RWA's. I think operational risk you saw and then on the market risk we had the measures which I explained before.

Okay, thank you.

The next question comes from Nate Nemes from UBS. Please go ahead.

Yes, good morning, and thank you for taking my questions. I have two of them, please. The first one would be going back to institutional clients. It's really good to see good performance and inflows into four of the six boutiques, yet you are still seeing some outflows from equities or namely the quality 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, EM, and so on? That's the first question. The second question would be going back to the jump in the CET1 ratio. And I appreciate the color on operational risk. Also, I'm aware that some of that has to do with market risk and tail risk hedges. My question is, should we expect somewhat more volatile market risk RWA's going forward? Or this is a single one-time jump, and this is a baseline from which on you'll develop simply along the lines of normal business volumes. Thank you.

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 are franchising conviction equities, MTX is benefiting. You've seen from the slide that one of the key prestigious mandate win from a US 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 Seven, AI, tech, etc. has had a predominant impact on market behavior and has therefore penalized any retail or 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, etc. They actually are RFPing 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 that's where we're standing right now as we look at it but em is not the factor for quality growth and capital for you sure so

on the market risk RWAs and whether or not this is volatile. So I think probably it helps just to reflect one second on the structured solution business itself. So this is a margin-driven business, which is clearly depending on client activity, which again then is fueled by you know, healthy volatility of the markets and the 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, you know, we have done the optimizations. So certainly not going down from here. We have obviously a hedging arsenal ready and a prudent risk management, which just was exemplified in the turmoil after the Liberation Day. So I would steer you towards a somewhat flattish RWS there.

Thank you. That's very helpful.

As a reminder, if you wish to register for a question, please press star followed by one. The next question comes from Nicholas Herman from Citi. Please go ahead.

Yes, good morning. Thank you for taking my questions. I've got a few, but I'll start with three, and I might circle back if that's okay later. Can I just continue the line of questioning on institutional clients, please? Encouraging, but not as pricey, I guess you want EMS to stabilize, given strong markets. I'm interested, could you talk about the pipeline there? And more broadly, do you see this as being investors just addressing underway allocations or or and i guess even more broader than that it's usually 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 on what your clients are telling you um sticking with ic um i was a little surprised to see equities entering by 10 half on half despite clearly very strong equity markets Why was that AUM build so weak in Q4? And could you please disaggregate that between investment performance and flows? And then, finally, private client margins. How do you see the outlook for recurring margins? 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 benefits that those have driven to your P&L? Thank you.

Yes, thank you for the questions. Good morning, Nicolas. great difficulties to understand your first two 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. Yeah, listen, there is always pressure on those margins, right? over capacity 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 a certain pressure on the margin. So therefore, we mentioned last time that we have done two things. We have introduced a new modular product offering combined with rollouts 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, as I said, we don't just need to compensate for a certain book transformation towards some of the larger clients and 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 one and two so we can can you hear me okay there can you hear me okay is that clear yeah okay great um 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 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 hear what your clients are telling you there. And then the other part I see was I think equities AUM shrank by 10% in the half, despite clearly very strong equity markets. Could you please disaggregate the moving parts there between investment performance and markets and net new money, please? Thank you.

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 pecking order that we'd expect 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 six 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 uninvestable. And that was kind of, I guess, always questionable, right? If 50% of the GDP of the world is 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 they are moving parts and they're 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 products. The other franchise have stabilized to slightly up. So that's impact for us. It's MTX, emerging market equities. And then quality growth is the part that has suffered in terms of outflows, as we've mentioned. EM having come to an end, if you want, now by the end of last year, pretty much.

Thank you both. I'll probably circle back with a few more questions, but I'll let my colleagues continue.

Sounds good. Thanks, Nicolas.

Ladies and gentlemen, that was the last question. I would now like to turn the conference back over to Christelle Rondudelint for any closing remarks.

Thank you all for joining us today and for your questions. We appreciate your continued interest in Funturbo. Should you have any additional questions, please do not hesitate to reach out to our investor relations teams. We look forward to seeing you later at our AGM in April. Until then, we wish you a successful day and a great finish to your week. Thank you very much.