Efg International Ag · SIX:EFGN
Efg International — FY2009 Earnings Presentation
54 slides from Efg International's earnings presentation, Mar 17, 2010
Slide 1: Full year results presentation 2009
Full year results presentation 2009 Zurich, 17 March 2010 Practitioners of the craft of private banking 1
Slide 2: Disclaimer
Disclaimer This presentation has been prepared by EFG International AG 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 any securities regarding EFG Int
Slide 3: Introduction
1.0 Introduction Lonnie Howell, CEO 2.0 Performance Current status, 3.0 outlook 4.0 Summary 3
Slide 4: Challenging conditions, but improvement during year
Challenging conditions, but improvement during year • 2009 started very slowly, particularly first four months. • Turbulent market and economic environment; clients ultra-cautious. • For EFG, some particular pressure points: low reliance on discretionary; investments in growth; difficult environment
Slide 5: 2009 below 2008; H2 improved on H1
2009 below 2008; H2 improved on H1 vs. 2008 H2 vs. H1 09 CROs 650 10% 4% Revenue- generating AUM CHF 86.2 bn 14% 7% Private client CHF 8.7 bn Represents 12% Represents 11% net new assets NNA growth NNA growth Revenues CHF 859.1 m 9% 8% Net profit CHF 101.1 m 54% 305% 5
Slide 6: Conditions a catalyst to enhance efficiency
Conditions a catalyst to enhance efficiency Cost reduction programme initiated early 2009 • Addressed loss-making CROs (reduced by net 76). • Closed 7 offices, plus 3 pending. • General savings in compensation / operating expenses. • On pro forma basis, cost savings realised of close to CHF 40 m in
Slide 7: A unified asset management business
A unified asset management business • Pulled together under unified leadership. • Enhanced support to CROs. • Will have strong new business orientation. • Combined sales force + individual business activities. • Developing specific niches – EFG Financial Products. 7
Slide 8: Capacity for growth intact; continuing to invest
Capacity for growth intact; continuing to invest • Recruited 94 CROs. Emphasis on teams given encouraging results. • Selectively extended physical presence. • EFG Financial Products grew dynamically. • Most new private banking businesses delivered strong growth. • Continued strong net new money grow
Slide 9: Performance
1.0 Introduction 2.0 Performance Rudy van den Steen, CFO Current status, 3.0 outlook 4.0 Summary 9
Slide 10: Key performance indicators
Key performance indicators Average revenue- Private client net new Operating income RoAUM Net profit generating AUM (in CHF bn) assets (in CHF bn) (in CHF m) (in bps) (in CHF m) 89.5 18.7 112* 946.3 221.9 80.5 107 859.1 8.7 101.1 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 Private client net n
Slide 11: Operating income
Operating income Net interest Net commissions Other income (in m) (in m) (in m) - 8% -13% 12% 306.3 527.6 527.6 286.6 306.3 571.7 98.2 263.3 497.6 88.0 2008 2009 2008 2009 2008 2009 • Low interest rate environment • Relative constant level of • Life settlement polices had a net continued to limit in
Slide 12: Return on AUM
Return on AUM Return on AUM Average AUM development (in bps) (in CHF bn) 5% 123 89.6 89.4 89.5 119 81.2 83.8 80.5 118 77.2 76.5 72.5 115 112* 107 107 107 107 1H07 2H07 1H08 2H08 1H09 2H09 2007 2008 2009 1H07 2H07 1H08 2H08 1H09 2H09 2007 2008 2009 • RoAUM impacted by lower management and • Average r
Slide 13: AuM development
AuM development (CHF bn) • Private client growth rate in net new assets of 13% (12% including loans) • Positive market performance 8.1 contributed CHF 4.6 bn, primarily driven by a strong increase in 0.6 global equity markets. (2.4) 4.6 (0.1) • Relatively stable foreign currency rates results in net
Slide 14: Net new money & HF assets
Net new money & HF assets Private client net new money (in CHF bn) Evolution of Private Banking AUM vs HF assets MBAM & Private (in CHF bn) Total CMA Banking 13.5 Dec 2008 5.5 69.9 75.4 Market movements 0.2 4.4 4.6 6.4 5.4 4.6 4.9 4.7 4.7 FX impact (0.2) 0.1 (0.1) 3.4 HF redemptions (2.4) - (2.4) 1H
Slide 15: Regional breakdown of Assets under Management
Regional breakdown of Assets under Management Changes by region By region 31.12.08 31.12.09 As % of total (CHF bn) Switzerland 20.9 22.4 26% Asia 9.5 11.4 13% Switzerland 1.5 Americas 10.3 15.1 18% Asia 1.9 UK & Channel Islands 10.7 12.5 15% Americas 4.8 Rest of Europe 14.8 16.3 19% UK & Channel 1.8
Slide 16: Breakdown of Assets under Management
Breakdown of Assets under Management 31.12.09 • Increase of proportion of equity-related By category 31.12.08 31.12.09 (in CHF bn) AUM primarily due to overall appreciation Cash & Deposits 28.9% 25.3% 21.8 in equity markets in 2009 by approx. 30%. Bonds 14.4% 17.2% 14.8 Offset by limited rebalancing
Slide 17: Operating expenses
Operating expenses Personnel expenses (in CHF m) Other operating expenses (in CHF m) Cost-income ratio* (in %) 5% -2% 469.0 79.0 306.3 447.4 306.3 191.3 187.3 69.5 2008 2009 2008 2009 2008 2009 • Increase reflects net impact of business • Decline in expenses mainly driven by • CIR primarily impacted
Slide 18: Development of amortisation and tax rate
Development of amortisation and tax rate Amortisation of acquisition Effective tax rate related intangibles (in CHF m) (in %) 65.7 19.7 11.5 52.0 46.0 4.9 2008 2009 2008 2009 • Additional CHF 19.7 m due to • 2009 below expected range due to accelerated amortization of deferred tax assets setup on st
Slide 19: Segmental profits before corporate center costs
Segmental profits before corporate center costs Private banking • Segment profits declined from CHF 152.4 m to CHF 142.8 m in 2009 on full year effect of financial crisis and low interest rate environment. Asset management • Segment profits declined from CHF 101.5 m in 2008 to CHF 9.2 m in 2009 due
Slide 20: Core earnings - adjustments
Core earnings - adjustments (in CHF m) 2007 2008 2009 Core earnings 362.0 294.3 191.8 Comprises: Amortisation of acquisition-related intangibles 21.2 52.0 65.7 ESOP 8.8 20.4 25.0 IFRS net profit 332.0 221.9 101.1 Core earnings per share (in CHF) 2.42 1.98 1.32 Based on: Number of ordinary shares out
Slide 21: Comparison half-year performance
Comparison half-year performance Change vs (in CHF million) 1H 2008 2H 2008 1H 2009 2H 2009 1H 09 Operating income 527.6 418.7 412.1 447.0 8.5% Personnel expenses (217.8) (229.6) (232.2) (236.8) 2.0% Other operating expenses (85.6) (105.4) (89.1) (98.2) 10.2% Amortization of tangible fixed assets &
Slide 22: Balance sheet highlights
Balance sheet highlights (in CHF m) Dec 31, 2008 Dec 31, 2009 Loans and advances to customers 7,424 8,218 Due to customers 14,213 15,728 Structured product issuances 680 1,002 Net funding from clients (in CHF bn) 8.5 Deposit/Loan Ratio 203% (in CHF m) Dec 31, 2008 Dec 31, 2009 Acquisition related in
Slide 23: Movement in intangibles / changes in earnouts
Movement in intangibles / changes in earnouts (in CHF m) 2008 2009 Variation Acquisition related Intangible assets 1,745 1,477 - 268 Contingent acquisition obligations down to CHF 41 m Contingent acquisition obligations 313 41 -272 • During 2009 total acquisition related intangible assets were decre
Slide 24: Breakdown of balance sheet
Breakdown of balance sheet Total liabilities & Total assets: CHF 20.6 bn equity: CHF 20.6 bn Generally AA rated banks Due to banks 0.4 Cash & banks 3.8 Deposits 15.7 Sovereign / AAA Treasury bills 0.8 Derivatives 0.3 Available 4.3 for sale - Sovereign*; Financial Designated 0.7 - EU Quasi-Sovereign
Slide 25: Capital developments
Capital developments Evolution of BIS capital position Breakdown of RWAs (in CHF bn) 12.5% 13.7% Total Capital Ratio 12.5% 13.7% Tier 1 Ratio 16.7% 5.9 5.8 0.7 0.4 12.5% 13.7% 1.6 1.6 3.8 3.7 Dec 08 Dec 09 Dec 08 Dec 09 Market / Settlement / Non- Evolution of BIS Tier 1 ratio counter party related O
Slide 26: Dividend proposal: in line with historical payout ratio
Dividend proposal: in line with historical payout ratio EFG International AG EFG International AG Historical dividends per share (in CHF) Dividend proposal for 2009 & Payout ratio 21.6% 17.0% 19.0% 17.5% 2009 Net profit attributable (in CHF m) 76.6 0.35 0.30 Total amount of proposed ordinary dividen
Slide 27: Life settlement policies at cash value
Life settlement policies at cash value • Cumulative cash invested of USD 668 m • Carrying value of USD 646 m plus cash profits on death benefits of USD 10 m totals USD 656 m • Income accrual for 2.5 months in 2010 of approx. USD 13 m • Hence, carrying value in mid-March 2010 exceeds historic cash in
Slide 28: Current status, outlook
1.0 Introduction 2.0 Performance Current status, 3.0 Lonnie Howell, CEO outlook 4.0 Summary 28
Slide 29: Building on solid foundations
Building on solid foundations With various pressures on the industry, worth restating generic strengths that continue to serve us well. • Clear focus on private banking & asset management. • Continuity of leadership, approach and CROs (thus for clients). • A flexible, entrepreneurial business model.
Slide 30: Have long been onshore as well as international
Have long been onshore as well as international Onshore businesses in Switzerland Europe Americas • Internationally diversified. • UK • USA • Strong in expats/UHNWIs. • Sweden • Canada • European clients supported by • Spain onshore businesses. • France Asia / Middle East • Denmark • India • Finland
Slide 31: Some strong regional performances
Some strong regional performances Most businesses delivered growth. Strong growth from new operations Luxembourg – AUM growth over 50%. UK - generated a record profit in local currency terms. France – double digit AUM growth. Banking license, changed name. Spain – AyG grew private Miami – grew AUM b
Slide 32: CRO enhancement / recruitment
CRO enhancement / recruitment Progress • Addressed loss-marking CROs. Number reduced by 170. 94 170 • Selective recruitment added 94 CROs. 726 • Raised performance thresholds (profitable on running rate basis by end of first year). 650 Net decline • More emphasis on recruiting teams. Strong - 76 bus
Slide 33: Expanding our international footprint
Expanding our international footprint Opened new offices during year; others in train Ottawa Copenhagen, Denmark Shanghai (early 2010) Key Biscayne (early 2010) Frankfurt Abu Dhabi Bangalore Montevideo 33
Slide 34: A range of other initiatives
A range of other initiatives Broadening offering and repositioning Switzerland Sweden Attractive opportunity to attract Repositioned to provide broader CROs. range of wealth mgt solutions to Strengthened strategic hiring institutional & private clients. function. Changed name to EFG Bank AB Planning
Slide 35: Meeting challenges in hedge funds
Meeting challenges in hedge funds Hedge fund businesses caught in sectoral “perfect storm”. However, needs to be seen in context: Marble Bar Asset Management • AuM under pressure. Decision to maintain liquidity punished. • Superior track record over time. • Ideally suited to portfolios of private cl
Slide 36: Building an asset management business
Building an asset management business • Private banking and asset management are inter-linked. • Scope to broaden & deepen relationships by supporting CROs. • Benefits re share of wallet, margins, and even CRO recruitment. • Synergies in institutional business development. • Recognition of capabilit
Slide 37: EFG Financial Products demonstrates art of possible
EFG Financial Products demonstrates art of possible An impressive list of achievements in 2009 • Continued dynamic growth in only second year of operation. • Profitable. • Clients up over a third. • AuM over CHF 1 billion. • Swiss Derivatives award for transparency. • Extending its geographical reac
Slide 38: Our profile is growing and brand value increasing
Our profile is growing and brand value increasing Differentiated and cost-effective approach to raising profile. Diverse sponsorships + targeted advertising. Various polo (e.g. Cartier International) Le Mans Classic Short Story Award The message is getting through Independent surveys in Europe show
Slide 39: Strategic priorities
Strategic priorities • Near-term focus on organic growth, not acquisitions. • Continued cost discipline. • Continue to hire quality CROs. • Selectively extend representation. • Deliver historic average growth in AUM per CRO of CHF 30 million. • All private banking businesses on expansion course. • A
Slide 40: Summary
1.0 Introduction 2.0 Performance Current status, 3.0 outlook 4.0 Summary Lonnie Howell, CEO 40
Slide 41: Summing up
Summing up • Trends are positive. • Proven ability of private banking to generate net new money. • Asset management offers significant upside potential. • Further improvements in line with global economy. • CROs remain proven core of business. 41
Slide 42: Practitioners of the craft of private banking
Practitioners of the craft of private banking www.efginternational.com 42
Slide 43: Appendix
5.0 Appendix 43
Slide 44: Consolidated income statement (audited)
Consolidated income statement (audited) (in CHF million) 2008 2009 Change Net interest income 286.6 263.3 -8.1% Net banking fee & commission income 571.7 497.6 -13.0% Net other income 88.0 98.2 11.6% Operating income 946.3 859.1 -9.2% Personnel expenses (447.4) (469.0) 4.8% Other operating expenses
Slide 45: Consolidated income statement (audited)
Consolidated income statement (audited) Change (in CHF million) 1H 2008 2H 2008 1H 2009 2H 2009 vs 1H 09 Net interest income 127.3 159.3 153.8 109.5 -28.8% Net banking fee & commission income 306.3 265.4 204.3 293.2 43.5% Net other income 94.0 (6.0) 54.0 44.3 -18.0% Operating income 527.6 418.7 412.
Slide 46: Consolidated balance sheet (audited)
Consolidated balance sheet (audited) (in CHF million) Dec 2008 Dec 2009 Change Cash and balances with central banks 115 265 130% Treasury bills and other eligible bills 74 771 NM Due from other banks 3,731 3,520 -6% Derivative financial instruments 453 286 -37% Financial instruments 5,119 5,835 14%
Slide 47: Segmental breakdown
Segmental breakdown Private Banking and Wealth Management Asset Management Corporate center Marble Bar Asset Management Rest of Swiss Asia Americas UK Europe C. M. Advisors (CMA) EFG Financial Products Switzerland Hong Kong USA & Canada France Asset Management Divisions of Swiss and UK UK & banks Li
Slide 48: Segmental breakdown (audited) – 2009
Segmental breakdown (audited) – 2009 Performance Rest of Asset Swiss Asia Americas UK summary Europe Management Segment revenues 283.8 85.8 74.7 131.0 121.9 167.0 Segment expenses (156.0) (66.9) (65.0) (88.1) (124.8) (112.0) Profit before tax 112.1 14.5 4.4 37.8 (14.0) 3.8 Net profit 103.4 11.8 5.9
Slide 49: Segmental breakdown (audited) – 2008
Segmental breakdown (audited) – 2008 Performance Rest of Asset Swiss Asia Americas UK summary Europe Management Segment revenues 259.7 95.7 66.8 144.1 126.6 249.4 Segment expenses (165.0) (63.8) (56.4) (99.4) (116.3) (105.1) Profit before tax 78.4 28.5 3.3 35.2 1.2 104.0 Net profit 82.3 24.2 1.5 30.
Slide 50: Life settlement policies balance sheet evolution
Life settlement policies balance sheet evolution (USD m) Policies acquired in 2007 397 Mark-to-market in equity 13 Accrued income 13 Value at the end of 2007 423 Premiums paid in 2008 65 Policies acquired 148 Accrued income 50 Mark-to-market in P&L (59) Mark-to-market in Equity (59) Value at the end
Slide 51: Goodwill & Intangibles Assumptions - MBAM
Goodwill & Intangibles Assumptions - MBAM (USD million) 2009 2010e 2011e 2012e Average AUMs (revenue-generating, incl. 2.1 2.0 2.9 3.9 leverage, in USD bn) Revenues 47.5 78.8 119.2 158.4 Profit before tax 9.1 16.5 34.4 55.2 Note: in March 2010 an agreement was signed with the sellers/principals of t
Slide 52: Goodwill & Intangibles Assumptions - CMA
Goodwill & Intangibles Assumptions - CMA (USD million) 2009 2010e 2011e 2012e Average AUMs, in USD bn 1.1 2.1 4.3 8.4 Revenues 10.4 15.1 29.7 60.0 Profit before tax 5.3 10.1 22.2 48.9 Assumptions for future performance 52
Slide 53: Goodwill & Intangibles Assumptions – DSAM
Goodwill & Intangibles Assumptions – DSAM* (CHF million) 2009 2010e 2011e 2012e AUMs, in CHF bn 4.8 7.6 11.0 15.4 Revenues 33.1 40.8 50.0 60.6 Profit before tax (6.0) 17.0 21.3 26.7 * Includes product structuring business, Swedish private banking business and Quesada Kapitalförvaltning AB business A
Slide 54: Contacts
Contacts Media Investors Strategic Marketing & Communications EFG International Investor Relations • Keith Gapp, Head of SMC • Jens Brueckner, Head of Investor Relations • Telephone: +41 44 226 1217 • Telephone: +41 44 226 1799 • E-mail: keith.gapp@efggroup.com • E-mail: jens.brueckner@efggroup.com