Sharper client focus in a volatile world

High employee engagement and sharp client focus strengthened Carnegie’s trust capital, financial performance and income growth in 2019. The bumpy beginning to 2020 reminds us, however, that market and external conditions are beyond our control

The dramatic beginning of 2020 is overshadowing thestrong market climate in 2019, when the Nordic stock exchanges had their best year in almost a decade, as evident in activity among our client groups. Our income rose by15 percent to a record-setting SEK 2.6 billion and operating profit grew by 32 percent to top SEK 500 million.

Much of this success is due to the client trust Carnegie has built up over many years. Client satisfaction has become the external hallmark of Carnegie and our internal landmark. Once again, we defended the highest client trust in the market in essentially all target groupsand categories in 2019. Carnegie was recognised for its knowledge, advisory and service in equity research, brokerage, corporate advisory, corporate bonds, wealth management, corporate access and back office in most client and market surveys during the year.

We also had a stable inflow of new clients in all business units, particularly in Private Banking.

The positive performance is also based on a favourable earnings mix, with more geographies contributing to income growth. In parallel, growth in corporate transactions, Private Banking and brokerage offset a moderate downturn in the number of IPOs.

Strong corporate transactions market

The Nordic corporate transactions market remained vibrant in 2019 and Carnegie solidified its leading position. We were involved in more equity capital market transactions than any other firm in the Nordic market and nearly twice as many as our closest competitor.

Growth was strongest in mergers and acquisitions.Unlisted transactions are an aspect of our ambition to widen our income base. The cyclicality of transactions based on generational succession, for example, is often different from that for IPOs. We increased the share of repeat income in Private Banking, which is further increasing the stability of earnings capacity.

The strength of our capital allocation ecosystem is most apparent when all parts of the bank and all skills are coordinated. This was particularly clear in 2019 within unlisted investments and issues.

Private Banking has executed several unique transactions as an aspect of this, where our high net worth and committed clients have been given the opportunity to make investments usually available only to large institutions.

Increased market shares

New client inflow to Private Banking was very good and assets under management rose by 33 percent during the year. The new office in Linköping, opened in late 2018, contributed to the success during its first year in operation.

Our strong equity research and execution capacity are instrumental forces in Carnegie’s high activity in corporate transactions. Our broad coverage of listed companies on the Nordic stock exchanges is persistently ranked highest in the market, our trading volumes are rising and interest in our equity research is growing among institutional investors outside the Nordics.

Sustainability in every aspect of the business

Sustainability factors have been an integrated component of equity research at Carnegie for a long time, but are now playing an even more prominent role and are often a critical element in the valuation of equities and companies. This is putting new demands on research and Carnegie now includes sustainability metrics for all Nordic listed companies we cover.

The sustainability perspective permeates every aspect of our business and we are continuing to deliver responsible advisory, where we endeavour to use our market role and position to encourage and stimulate the most responsible investments possible.

Bumpy beginning to a new decade

The early days of 2020 remind us that market conditions are beyond our control. The spread of the coronavirus is increasing volatility in the financial markets and nervousness is growing in the markets where Carnegie operates.

Against this background, the Board of Directors has decided to withdraw the previously proposed dividend for 2019.

Carnegie is maintaining its focus on what we can affect, concentrating on fostering client trust and employee commitment. The sharpest advisory in the market must arise from a workplace that encourages collaboration and career development to get the best out of every employee. That is our primary competitive advantage

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