Swiss Life Earnings: Good Fee Income

Swiss Life SLHN has reported a good fee income and commission income result for the first quarter of 2023. We raise our fair value estimate to CHF 630 per share and maintain our no moat rating.

It has been a challenging real estate market in terms of transactions over the first quarter of 2023. Despite this, Swiss Life reported fee and commission income of CHF 595 million versus CHF 579 million in the same quarter of the prior year. We believe that is roughly comparable with the CHF 2.37 billion in fee plus commission income that the business reported over the whole of 2022. In this quarter that income has been supported by own- and third-party products with Germany posting a particularly strong result as the business expanded its advisor base there. Further, fee income has been buoyed by strong sales of structured products within the French business, likely the private bank, to EUR 100 million.

The asset management business has performed well with net new asset flows in the third-party asset management business of CHF 2.5 billion versus CHF 1.2 billion in the first quarter of the prior year. Assets under management totalled CHF 108 billion versus CHF 105 billion at the end of 2022 and this division contributed fee income of CHF 212 million though that is down because of the sale of the firm’s Livit FM Services business at the end of 2022.

The direct investment yield remains stable at around 0.6% on a nonannualised basis. The CHF 1 billion buyback is almost complete.