Slide 1: Full-year results presentation 2016
Full-year results presentation 2016 Zurich, 15 March 2017
Slide 2: Important Legal Disclaimer
Important Legal Disclaimer This document has been prepared by EFG International AG (“EFG") solely for use by you for general information only and does not contain and is not to be taken as containing any securities advice, recommendation, offer or invitation to subscribe for or purchase or redemptio
Slide 3: Agenda
Agenda Introduction Joachim H. Straehle, CEO EFG International Financial performance Giorgio Pradelli, Deputy CEO & CFO EFG International Outlook, conclusion Joachim H. Straehle Q&A All 3
Slide 4: Introduction
as Introduction
Slide 5: 2016 results highlights
2016 results highlights AuM of close to CHF 145 bn IFRS net profit at CHF 339 m Strong capital position and stable dividend Cost/FTE reduction targets overachieved EFG became one of the largest private banks in Switzerland through the Scale acquisition of BSI with close to CHF 145 bn in Au
Slide 6: BSI acquisition – goals achieved
BSI acquisition – goals achieved Rationale of transaction proven Timely closing of the acquisition of BSI announced on 1 November 2016 Combined business forms a leading pure-play private bank with Swiss roots Very solid capital and liquidity position Significant synergy potential identified
Slide 7: Financial performance
Financial performance EFG standalone BSI standalone EFG-BSI combined 7
Slide 8: EFG International FY 2016 – Financials summary
EFG International FY 2016 – Financials summary FY 2016 financial results include 12 months of EFG and 2 months of BSI* 2016 vs. 2015 Underlying net profit**, CHF m 82.3 91.1 IFRS net profit, CHF m 339.3 57.1 Operating income, CHF m 722.0 696.7 Underlying operating income**, CHF m 762.7 696.3 Underly
Slide 9: FY 2016 results into perspective
FY 2016 results into perspective BSI acquisition positions EFG to benefit from long term opportunities in the sector Financially attractive – implied P/TBV multiple of 0.65x* Acquisition of BSI Significant synergies will be realised; integration on track Overachieved EFG’s standalone cost redu
Slide 10: Scope of FY 2016 financials presentation
Scope of FY 2016 financials presentation FY 2016 financial results will be analysed in 4 different sections to reflect the underlying performance of the business IFRS Consolidated Financial Statements Include consolidated financial results for 12 months of EFG and 2 months of BSI Exclude BSI rel
Slide 11: EFG IFRS net profit of CHF 339.3 m in 2016
EFG IFRS net profit of CHF 339.3 m in 2016 EFG standalone underlying net profit at CHF 91.1 m, same level as in 2015 A EFG standalone underlying B BSI standalone Combined 2016 IFRS net profit of CHF 339.3 m, impacted by a net amount of CHF 257.0 m. Acquisition-related impacts & D non-underlying im
Slide 12: EFG standalone underlying – Financials summary
A EFG standalone underlying – Financials summary Underlying performance of EFG on 12 months standalone basis 2016 vs. 2015 Underlying net profit*, CHF m 91.1 91.1 Underlying operating income*, CHF m 677.8 696.6 Underlying revenue margin*, in bps 84 85 Net new assets, CHF bn (0.5) 2.4 Net new asset g
Slide 13: Revenue-generating AuM evolution since IPO in 2005
A Revenue-generating AuM evolution since IPO in 2005 Approx. 10% average annual growth since IPO in 2005 at constant 2016 FX rates, reflecting robustness of EFG business model – transformational acquisition (in CHF bn) CAGR of c. 7% at Total continuing operations reported FX rates Discontinued opera
Slide 14: EFG standalone underlying – 2016 Highlights
A EFG standalone underlying – 2016 Highlights Maintained underlying revenue drivers at 1H 2016 level Revenue-generating Average revenue- Net new assets Underlying RoAuM AuM generating AuM (in CHF bn) (in bps) (in CHF bn) (in CHF bn) Other income RoAuM on AuM Annualized growth rate excl. loans Commis
Slide 15: EFG standalone underlying – Operating income (I)
A EFG standalone underlying – Operating income (I) 2H 2016 core private banking revenues in line with 1H 2016 when adjusted for FX impact Underlying operating income components (in CHF m) 2H 2016 private banking and asset management operating income impacted by GBP devaluation (15% of AuMs denomin
Slide 16: EFG standalone underlying – Operating income (II)
A EFG standalone underlying – Operating income (II) Underlying operating income impacted by decline in commission income, partially offset by increase in lending margins Total underlying operating income Underlying net interest income Underlying net commissions Underlying net other income (in CHF m)
Slide 17: EFG cost reduction programme – operating expenses
A EFG cost reduction programme – operating expenses EFG standalone cost reduction programme delivered cost savings in excess of CHF 30 m, well above the initially announced target Evolution of underlying operating expenses Evolution of underlying operating expenses (in CHF m) (in CHF m) Achieved 2
Slide 18: Update on EFG standalone FTE reduction initiative
A Update on EFG standalone FTE reduction initiative Reduction of 287 FTEs, 44% above initial target of 200 FTEs communicated in November 2015 Evolution of FTEs Evolution of FTEs Start of cost reduction Announcement of cost programme reduction programme 2,183 2,183 Target 2,162 2,155 1,990 2,103 2,13
Slide 19: EFG standalone underlying – Operating expenses
A EFG standalone underlying – Operating expenses 5% year-on-year improvement in underlying operating expenses reflects delivery of cost reduction programme and FTE reductions Underlying operating expenses Underlying cost-income ratio* (in CHF m) (in %) Underlying cost-income ratio at 82.7% - 31.2
Slide 20: EFG standalone - Growth and productivity drivers
A EFG standalone - Growth and productivity drivers Number of CROs declined, driven by ongoing performance management and lower level of hiring, 30 CROs hired in 2016 Number of CROs AuM per CRO (in CHF m) 445 455 448 410 + 25% 224 462 212 191 444 424 400 179 180 11 174 389 1H15 2H15 1H16 2H16 2012 20
Slide 21: EFG standalone – New CRO performance
A EFG standalone – New CRO performance CRO performance management delivers results Number of New CROs 61% of CROs hired in 2015 and retained 102 are profitable 69 66 42% of CROs hired in 2016 are already 42 profitable, well ahead of plan 30 36 26 15 15 11 Data points on CRO evolution reflect i
Slide 22: EFG standalone - Revenue-generating AuM development
A EFG standalone - Revenue-generating AuM development Year-end 2016 revenue-generating AuM stood at CHF 82.2 bn Revenue-generating AuM evolution (in CHF bn) Annualized NNA growth in 2016 at approx. -1% 1.2 Acquisitions & disposals include the 83.3 (0.4) (0.5) 82.2 effects of (1.3) - Bank Leumi:
Slide 23: EFG standalone - AuM and NNA by business region
A EFG standalone - AuM and NNA by business region Accelerated growth in the UK, negative growth in Asia due to client deleveraging, and in Latin America as a result of macro economic situation and country initiatives Dec 2016 AuMs 2016 NNA: as % of RoAuM NNA growth CHF 82.2 bn CHF (0.5) bn (in %) to
Slide 24: BSI standalone
BSI standalone rc 24
Slide 25: BSI standalone (2 months) – Financials summary
B BSI standalone (2 months) – Financials summary Underlying performance of BSI on 2 months standalone basis Two month BSI performance provides limited 1 Nov 2016 – 31 Dec 2016 visibility into underlying profitability potential IFRS net profit, CHF m (8.8) - Negative revenue impact by relatively Op
Slide 26: BSI standalone - Revenue-generating AuM development
B BSI standalone - Revenue-generating AuM development Negative NNA Nov-Dec 2016 accentuated by Group restructuring and regularisation Revenue-generating AuM evolution (in CHF bn) NNA attrition CHF 23.1 bn of NNA attrition during 2016 Other business reasons NNA Nov-Dec at CHF (4.9) bn, above orig
Slide 27: EFG-BSI combined
EFG-BSI combined 27
Slide 28: EFG-BSI combined – Balance sheet
C EFG-BSI combined – Balance sheet Strong and highly liquid balance sheet with total assets of CHF 42.3 bn Loan-deposit ratio at 51.6% Total assets: CHF 42.3 bn Total liabilities & equity: CHF 42.3 bn Due to banks 0.4 Liquidity coverage ratio (LCR) at 210% Cash & banks 11.8 Available Net stabl
Slide 29: EFG-BSI combined – Capital position (I)
C EFG-BSI combined – Capital position (I) Capital ratios further improved, CET1 ratio at 18.2% and Total Capital ratio at 20.0% Total Capital ratios* Breakdown of RWAs* (in %) (in CHF bn) Combined year-end 2016 RWAs at CHF 12.3 bn, declined by 17% vs. pro forma year-end 2015 RWAs of CHF 14.8 bn 20
Slide 30: EFG-BSI combined – Capital position (II)
C EFG-BSI combined – Capital position (II) Strong capital generation from underlying organic capital generation (380 bps) and acquisition impact (390 bps) Evolution of Total Capital ratio* (in %) Common Equity (CET1) Additional Tier 1 & Tier 2 Underlying capital No impact from goodwill Capital gener
Slide 31: Details on acquisition-related & non-underlying impacts, integration costs and synergies
Details on acquisition-related & non- underlying impacts, integration costs and synergies 31
Slide 32: Acquisition-related & non-underlying impacts
D Acquisition-related & non-underlying impacts Positive impact from expected reduced final BSI purchase price of CHF 784 m; CHF 110 m of incremental intangible assets identified as part of the acquisition accounting impacts Overview of acquisition-related impacts & non-underlying impacts (in CHF m)
Slide 33: Balance sheet quality improved
D Balance sheet quality improved Impairment charge of CHF 199.5 m on goodwill & other intangible assets related to previous acquisitions Goodwill & other intangible assets (in CHF m) Impairment charge of CHF 199.5 m, compensated by CHF 116.4 m of BSI intangibles recognized on 31 October 2016 254.9
Slide 34: Update on integration costs
D Update on integration costs Total amount of expected integration costs of CHF 250 m confirmed through detailed bottom-up budget process Phasing of integration costs (pre-tax) Breakdown of integration costs (pre-tax) (in CHF m) (in CHF m) Integration costs on actual cash basis 165 47 250 15 38 55.1
Slide 35: Update on cost synergies from BSI transaction
D Update on cost synergies from BSI transaction Upsized synergies target re-confirmed; earlier phasing-in of synergies from effort to drive efficiencies through accelerated legal integration process Targeted cost synergies (pre-tax) (in CHF m) Revised synergies CHF 30 m pre-tax cost reduction vs.
Slide 36: AuM and revenue attrition
D AuM and revenue attrition Attrition estimate maintained at CHF 9.7 bn, albeit with earlier phasing Estimated AuM attrition (cumulative) (in CHF bn) At time of announcement of the transaction, potential AuM Actual attrition attrition was estimated to be around 5 -10% of the combined Attrition est
Slide 37: Net synergies
D Net synergies Positive impact on synergies phasing following a prompt and effective integration of BSI Estimated post-tax synergies (in CHF m)* Actual / revised estimates** Estimated post tax synergies (based on 17.5% tax 8th December estimate rate), confirmed at ~CHF 141 m Revenue synergies a
Slide 38: Outlook, conclusion
Outlook, conclusion rc 38
Slide 39: Current private banking landscape
Current private banking landscape Long-term opportunities Short-term challenges Global wealth forecasted to grow at 5.9% p.a. Challenging market conditions between 2015 and 2020E1 Current interest rate environment Highest growth in Emerging Markets Revenue generation under pressure Marke
Slide 40: 2015: Strategic priorities
2015: Strategic priorities Announced in 1H 2015 results presentation Grow AuM and Top line Adjust Adjust and develop and develop Grow AuM and Management and and management revenue Performance cultureculture performance Strategic thrust Reduce costs Sharpen strategic positioning Improve operational e
Slide 41: Strengths and opportunities of the combined Group
Strengths and opportunities of the combined Group Combine existing strengths of EFG and BSI; and realize opportunities through the integration STRENGTHS OPPORTUNITIES Focused, “Pure-play private banking” business model Significant cost synergy potential Globally diversified presence, with strong foo
Slide 42: Ambitions of the combined bank
Ambitions of the combined bank Improve competitive position, capture significant potential for economies of scale and deliver profitable growth Client-focused solutions instead of Offer our clients a unique private banking experience: Swiss quality private banking driven by entrepreneurial spirit st
Slide 43: 2017: Improved position in global wealth management market
2017: Improved position in global wealth management market Combined Group to reinforce its standing as a top-tier Swiss private bank Substantial scale and Maintain a strong capital position and a low risk profile significant synergy potential Integration of corporate functions and combining regi
Slide 44: Renewed brand positioning and logo
Renewed brand positioning and logo Single brand strategy; new logo is a fusion of EFG and BSI Renewed brand positioning and logo reflect corporate values and visual identity of both banks Renewed brand design brings the combined bank’s entrepreneurial spirit to life: contemporary, straightforwar
Slide 45: Update on integration timeline
Update on integration timeline Legal integration of Swiss business and foreign entities already in Q2 2017; Swiss IT migration planned for Q4 2017 Q2 2017 Legal integration Closure BSI SA IT migration (Switzerland) Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 BSI SA BSI Panama Swiss IT BSI Singapore BSI
Slide 46: Confirming medium-term operational targets
Confirming medium-term operational targets Medium term targets for the enlarged business, which will apply after completion of BSI’s integration: Continually grow revenue-generating AuM with a Net new assets targeted annualized growth rate of 3% to 6%1 Cost-income ratio Target a cost-to-income r
Slide 47: Conclusion
Conclusion Combined business is one of largest private banks in Switzerland with close to CHF 145 bn AuM EFG standalone cost reduction programme exceeded target; significant synergy potential for combined bank identified; performance-oriented approach sharpened Strong capitalization and low risk pro
Slide 48: www.efginternational.com
www.efginternational.com 48
Slide 49: Appendix
Appendix 49
Slide 50: EFG-BSI combined – Income statement (IFRS)
C EFG-BSI combined – Income statement (IFRS) (in CHF million) 2015 2016 Net interest income 200.6 196.9 Net banking fee & commission income 375.3 395.4 Net other income 120.8 129.7 Operating income 696.7 722.0 Personnel expenses (436.1) (466.5) Other operating expenses (154.1) (208.0) Amortisation o
Slide 51: EFG-BSI combined – Income statement (IFRS)
C EFG-BSI combined – Income statement (IFRS) (in CHF million) 1H 2016 2H 2016 Net interest income 102.3 94.6 Net banking fee & commission income 174.7 220.7 Net other income 64.7 65.0 Operating income 341.7 380.3 Personnel expenses (217.0) (249.5) Other operating expenses (75.0) (133.0) Amortisation
Slide 52: EFG-BSI combined – Balance sheet (IFRS)
C EFG-BSI combined – Balance sheet (IFRS) (in CHF million) Dec 2015 Dec 2016 Cash and balances with central banks 4,862 8,888 Treasury bills and other eligible bills 757 1,946 Due from other banks 2,168 2.924 Loans and advances to customers 12,062 18,878 Derivative financial instruments 735 831 Fina
Slide 53: BSI standalone (2 months) – Income statement (IFRS)
B BSI standalone (2 months) – Income statement (IFRS) (in CHF million) 2016 Net interest income 26.7 Net banking fee & commission income 48.7 Net other income 9.5 Operating income 84.9 Personnel expenses (51.5) Other operating expenses (34.6) Amortisation of tangible fixed assets & software (0.8) Am
Slide 54: EFG-BSI combined – Breakdown of AuM
C EFG-BSI combined – Breakdown of AuM 31.12.16 By category 31.12.15 31.12.16 (in CHF bn) Cash & Deposits 24% 24% 34.9 Bonds 20% 22% 31.8 Equities 21% 20% 29.0 Structured products 2% 2% 3.6 Loans 13% 13% 19.0 Funds 15% 13% 19.4 Other 4% 5% 6.9 Total 100% 100% 144.5 31.12.16 By currency 31.12.15 31.12
Slide 55: EFG standalone – Breakdown of AuM
A EFG standalone – Breakdown of AuM 31.12.16 By category 31.12.15 31.12.16 (in CHF bn) Cash & Deposits 27% 28% 22.9 Bonds 20% 21% 17.5 Equities 27% 26% 21.6 Structured products 3% 3% 2.5 Loans 14% 14% 11.4 Hedge Funds / Funds of HFs 4% 2% 1.9 Other 5% 5% 4.5 Total 100% 100% 82.2 31.12.16 By currency
Slide 56: BSI standalone – Breakdown of AuM
B BSI standalone – Breakdown of AuM 31.12.16 By category 31.12.15 31.12.16 (in CHF bn) Cash & Deposits 21% 19% 12.0 Bonds 21% 23% 14.3 Equities 16% 12% 7.4 Structured products 2% 2% 1.0 Loans 12% 12% 7.6 Funds 25% 28% 17.5 Other 2% 4% 2.5 Total 100% 100% 62.3 31.12.16 By currency 31.12.15 31.12.16 (
Slide 57: EFG-BSI combined – Segmental analysis 2016
C EFG-BSI combined – Segmental analysis 2016 Investment Performance summary Continental Corporate Switzerland Americas UK Asia and Wealth BSI Eliminations Total (in CHF m) Europe center Solutions Segment revenues 142.7 118.8 101.2 157.0 129.7 140.6 (44.9) 84.9 (108.1) 722.0 Segment expenses (116.6)
Slide 58: EFG standalone – Segmental analysis 2015
A EFG standalone – Segmental analysis 2015 Investment and Performance summary Continental Corporate Switzerland Americas UK Asia Wealth Eliminations Total (in CHF m) Europe center Solutions Segment revenues 150.5 118.0 100.6 168.9 119.4 162.5 6.4 (129.6) 696.7 Segment expenses (119.9) (89.6) (83.6)
Slide 59: Expected final purchase price at CHF 784 m, 0.65x P/TBV
D Expected final purchase price at CHF 784 m, 0.65x P/TBV Expected negative goodwill to increase to CHF 413 m from CHF 329 m*. Additional CHF 116 m of intangible assets reflecting the value of BSI client relationships (in CHF m) Expected final purchase price of 1,389 BSI estimated TBV at closing P
Slide 60: Life insurance policies portfolios
Life insurance policies portfolios Impact of life insurance portfolio on current financials Portfolio “Held to Maturity”* Carrying value USD 839 m / CHF 855 m (acquisition cost, premium paid, accrued interest) Net revenues in 2016 on life portfolios of CHF (21.0) m vs. 2015: CHF 0.1 m USD 68
Slide 61: Update on life insurance portfolios
Update on life insurance portfolios The carrying value of the HTM portfolio is fully recoverable Extraordinary and unprecedented premium increases - legal cases against Transamerica, AXA and Lincoln filed, strong legal claim Management assessed carrying value using its best estimates for premium
Slide 62: Contacts
Contacts Investors Media Investor Relations Marketing & Communications Jens Brueckner Daniela Haesler Head of Investor Relations Head of Marketing & Communications Telephone: +41 44 226 1799 Telephone: +41 44 226 1804 E-mail: jens.brueckner@efginternational.com E-mail: daniela.haesler@efginternation