Efg International Ag · SIX:EFGN
Efg International — H1 2023 Earnings Presentation
41 slides from Efg International's earnings presentation, Jul 26, 2023
Slide 1: Half-year 2023 results presentation
EFG INTERNATIONAL Half-year 2023 results presentation 26 July 2023 Zurich
Slide 2: Important Legal Disclaimer
Important Legal Disclaimer This document has been prepared by EFG International AG (“EFG”) solely for use by In view of these uncertainties, readers are cautioned not to place undue reliance you for general information only and does not contain and is not to be taken as on these forward-looking stat
Slide 3: Highlights
Highlights Giorgio Pradelli Chief Executive Officer EFG International I Half-year 2023 results 26 July 2023 Page 3
Slide 4: Resilient business model drives record performance
Resilient business model drives record performance +47% Record profitability 148mn target range p.a. • Resilient and diversified business model combined with strong and liquid balance sheet Net profit, in CHF • Record operating performance in 1H23 and further generation of operating leverage with op
Slide 5: Investing in future growth: Seizing strategic opportunities
Investing in future growth: Seizing strategic opportunities 50-70 Strong hiring momentum 75 ambition p.a. • Hiring CROs and other talent across functions and regions; breakeven expected within 18 to 24 months • Achieving scale organically in key strategic markets # new CROs in 1H23 • Increased compe
Slide 6: Financial performance
Financial performance Dimitris Politis Chief Financial Officer & Deputy CEO EFG International I Half-year 2023 results 26 July 2023 Page 6
Slide 7: Another step change in profitability
Another step change in profitability – Revenue outperformance coupled with investments for growth Net profit up +47% vs. 1H22 Key drivers Evolution of IFRS net profit in CHF mn Revenue outperformance, supported by higher interest rate environment 147.6 Taking the opportunity to invest in future
Slide 8: Strong operating performance leads to record profitability
Strong operating performance leads to record profitability – Actively investing in future growth NNA of CHF 3.0 bn, annualised growth rate of 4.2%, marking a strong acceleration in business development in Business 2Q 2023 development AuM at CHF 146.5 bn at 1H 2023 75 CROs have been hired, sign
Slide 9: Financials summary
Financials summary In CHF mn 1H23 2H22 1H22 Variation vs. 1H22 Variation vs. 2H22 Revenue-generating AuM (bn) 146.5 143.1 155.8 -6.0% 2.4% Net new assets (bn) 3.0 2.5 1.7 +76.5% +20.0% Net new assets growth rate (%) 4.2% 3.2% 2.0% +2 pp +1 pp Revenue margin (bps) 100 91 73 +27 bps +9 bps Operating i
Slide 10: Strong progress towards 2025 financial targets
Strong progress towards 2025 financial targets Net new asset growth Cost/income ratio NNA growth (annualised) Evolution CIR in % 4-6% in % per 69% annum 78.1 74.0 72.1 4.2 3.2 2.0 1H22 2H22 1H23 1H22 2H22 1H23 Revenue margin Return on tangible equity Evolution RoAuM Evolution RoTE in bps in % 85 bps
Slide 11: NNA growth of 4.2% in 1H 2023
NNA growth of 4.2% in 1H 2023 1H23 annualised NNA growth at 4.2% NNA growth levers Revenue-generating AuM evolution in CHF bn Existing CROs in CHF bn 3.0 2.6 2.8 2.0 0.8 (2.2) 146.5 143.1 1H21 1H22 1H23 New CROs1 in CHF bn 2.2 1.5 1.5 Dec 22 NNA Market FX Jun 23 1H21 1H22 1H23 Strongest NNA perfor
Slide 12: Substantial NNA growth across regions
Substantial NNA growth across regions Regional business development AuM breakdown NNA Annualised NNA (excl. loans) Revenue-generating AuM RoAuM* CHF 3.0 bn growth (in %) Annualised growth CHF 146.5 bn (in bps) (in %) Switzerland & Italy -0.7 -3.5% -2.2% Switzerland & Italy 41.3 129 Asia Pacific 1.1
Slide 13: EFG positioned as an attractive employer of choice
EFG positioned as an attractive employer of choice – Very strong CRO hiring momentum CRO evolution Key developments +47 CROs approved / Strategic hiring opportunity triggered from market # of CROs signed dislocation 661 654 638 On-boarding high quality, experienced CROs, mostly 221 218 Shaw and
Slide 14: Revenue margin at 100 bps
Revenue margin at 100 bps – Rebound in commission margin vs. 2H 2022 Substantial increase in operating income Key highlights Operating income in CHF mn Significant increase in NII vs. 1H 2022, driven by interest rate environment. 1H 73 91 100 bps bps bps 2023 NII at same levels as 2H 2022 Commis
Slide 15: Focus on revenue margin evolution and drivers
Focus on revenue margin evolution and drivers – Acting to increase commission margin RoAuM NII sensitivity to rates is now limited in bps – excl. life insurance portfolio NII sensitivity1 for additional +/-77 100bps increase / decrease USD GBP in interest rates CHF 97 EUR in CHF mn 81 36 Net interes
Slide 16: Strengthening EFG's content capabilities
Strengthening EFG’s content capabilities Evolution of mandate penetration Key developments Penetration of advisory, discretionary mandates and funds 1H23 mandate penetration level as % of AuM, excluding loans and IAM business negatively impacted by a reduction of 65-70% discretionary mandates as a
Slide 17: Further improving efficiency, while investing in growth
Further improving efficiency, while investing in growth – Cost-to-income ratio improves to 72.1% Increase in personnel expenses reflects growth investment Key highlights Operating expenses in CHF mn Cost-to-income ratio improves to 72.1%: a 6 ppts improvement vs 1H 2023 FTEs 3,003 2,828 2,882 In
Slide 18: Actively managing costs – Expanding cost management actions to CHF 60 mn
Actively managing costs – Expanding cost management actions to CHF 60 mn Operating expense evolution in 1H 2023 Key drivers in CHF mn Upfront one-off hiring cost for new talent CIR 74.0% -2 pp 72.1% Higher accruals for variable compensation (on higher profits) Ongoing rigorous cost management
Slide 19: Strong balance sheet, with ample liquidity
Strong balance sheet, with ample liquidity – Launching new share buyback programme Balance sheet highlights Key metrics in CHF bn 31 Dec 2022 30 June 2023 Assets 40.9 40.9 Liabilities & Equity bn bn CET1 capital ratio (%) 14.7% / 16.6%* 17.3% Total capital ratio (%) 18.6% / 20.5%* 21.2% 1.0 Due to b
Slide 20: Capital evolution: The strongest capital position in recent years
Capital evolution: The strongest capital position in recent years Evolution CET1 capital ratio Gross capital generation 2.2% Net capital generation 1.5% 21.2 20.5 2.2 0.3 Total Capital Total Capital 3.9 3.9 Ratio Ratio (1.0) (0.4) CET1 Capital (0.4) 17.3 CET1 Capital 16.6 Ratio Ratio Enhanced return
Slide 21: Highlights of 1H23 results
Highlights of 1H23 results 1 Another step change in profitability 2 Actively investing in future growth 3 Strong and confident progress towards 2025 financial targets EFG International I Half-year 2023 results 26 July 2023 Page 21
Slide 22: Outlook and strategic priorities
Outlook and strategic priorities Giorgio Pradelli Chief Executive Officer EFG International I Half-year 2023 results 26 July 2023 Page 22
Slide 23: 2025 strategic plan: Sustaining profitable growth, achieving scale
2025 strategic plan: Sustaining profitable growth, achieving scale Growth accelerators Consistent financial and differentiators performance Drivers of sustainable profitable growth Content innovation Enhancing quality and enriching product offering to drive profitability NNA growth Continued revenue
Slide 24: Executing strategy with a dual focus
Executing strategy with a dual focus Business development Clients Optimising performance by leveraging unique client-centric approach and Simplicity ongoing focus on simplicity Superior service and first-class client Business transformation solutions Content Continued transformation and Attractive h
Slide 25: Superior service and people: Unique approach to create value
Superior service and people: Unique approach … embedded in to create value and meet client needs… EFG’s values Accountable Entrepreneurial 1. Focus on 2. Long-term Partnership with approach to provide clients' client clients driven by independent and tailored solutions needs relationships Hands-on i
Slide 26: First-class client solutions and content
First-class client solutions and content: Enhanced quality and enriched offering Holistic product offering Global markets access Discretionary and advisory solutions Structured products Financing and credit solutions Wealth and succession planning Alternatives/ responsible investing EFG’s products a
Slide 27: Digital solutions: Acceleration to drive revenues and efficiency
Digital solutions: Acceleration to drive revenues and efficiency 5-pillar digital strategy… …directly impacting key business metrics 1 Client, user and CRO experience Revenue 2 Value from data growth Optimising for 3 Efficiency and simplicity cost reductions 4 Core banking platform Strengthening 5 C
Slide 28: Strong start to the new planning cycle with record profitability
Strong start to the new planning cycle with record profitability 2025 targets 1H23 reported Financial targets NNA growth 4-6% p.a.1 4.2% p.a. Revenue margin 85bps 100bps Cost/income ratio 69% 72.1% RoTE 15-18% 17.8% Capital management framework CET1 management floor 12% 17.3% Dividend payout 50% n.m
Slide 29: 1H23 key takeaways
1H23 key takeaways We entered the new planning cycle from a position of strength Record performance in 1H23 is testament to EFG’s ability to execute its strategy throughout the cycle Strong start to the new strategic cycle and investments in future growth further increase our confidence in our abili
Slide 30: EFG International I Half-year 2023 results 26 July 2023 Page 30
EFG International I Half-year 2023 results 26 July 2023 Page 30
Slide 31: Appendix
Appendix EFG International I Half-year 2023 results 26 July 2023 Page 31
Slide 32: Income statement (IFRS)
Income statement (IFRS) In CHF mn 1H23 2H22 1H22 2H21 1H21 Net interest income 249.4 243.5 152.0 132.1 127.2 Net banking fee & commission income 294.2 273.6 355.9 382.4 374.1 Net other income 181.2 149.0 96.0 110.8 128.0 Operating income 724.8 666.1 603.9 625.3 629.3 Personnel expenses (381.6) (354.
Slide 33: Balance sheet highlights
Balance sheet highlights In CHF mn 31 December 2022 30 June 2023 Cash & banks 11,584 9,363 Treasury bills 3,055 1,992 Derivatives 1,796 1,223 Financial instruments 9,128 10,095 Loans 16,748 16,572 Goodwill & intangibles 239 211 Other 989 1,590 Total assets 43,538 40,901 Due to banks 923 1,039 Due to
Slide 34: AuM evolution
AuM evolution AuM by asset class AuM by asset class FY 2022 1H 2023 In % In % Other Other Hedge funds Hedge funds 2% 6% Loans Cash & deposits Loans 2%6% Cash & deposits 25% 12% 24% 12% Structured Structured products 3% products 3% CHF 143.1 bn CHF 146.5 bn 20% 22% 31% Bonds 31% Bonds Equities Equiti
Slide 35: Segmental analysis 1H23
Segmental analysis 1H23 Continental Investment & Global Performance summary Switzerland Europe & Americas UK Asia Pacific Wealth Markets & Corporate Elimination Total (in CHF mn) & Italy Middle East Solutions Treasury Segment revenues 237.2 127.4 68.5 87.2 85.0 61.7 40.8 17.0 - 724.8 Segment expense
Slide 36: Segmental analysis 1H22
Segmental analysis 1H22 Continental Investment & Global Performance summary Switzerland Europe & Americas UK Asia Pacific Wealth Markets & Corporate Elimination Total (in CHF mn) & Italy Middle East Solutions Treasury Segment revenues 165.6 101.7 42.3 76.1 85.0 72.2 74.1 (13.1) - 603.9 Segment expen
Slide 37: Segmental analysis 2H22
Segmental analysis 2H22 Continental Investment & Global Performance summary Switzerland Europe & Americas UK Asia Pacific Wealth Markets & Corporate Elimination Total (in CHF mn) & Italy Middle East Solutions Treasury Segment revenues 193.7 92.5 60.0 78.5 81.6 67.4 99.4 (7.0) - 666.1 Segment expense
Slide 38: Update on Life Insurance Exposures (I)
Update on Life Insurance Exposures (I) Life insurance related portfolios • Legacy exposures acquired more than 10 years ago Outright portfolio • Outright portfolio carried at fair value (marked-to-model, Level 3) for IFRS accounts – small Death size of portfolio introduces substantial P&L volatility
Slide 39: Update on Life Insurance Exposures (II)
Update on Life Insurance Exposures (II) Direct holding of life insurance Death benefit: CHF 907.4 mn policies for 138 insureds (2022: 156) of an average age of 93.9 years Carrying value: CHF 487.5 mn Outright portfolio YTD 2023 premium: CHF 48.1 mn Life expectancy: 3.6 years Operating in
Slide 40: Upcoming events in 2023 & 2024
Upcoming events in 2023 & 2024 Event Date 10M 23 trading update 16 November 2023 Full-year 2023 financial results 21 February 2024 Annual General Meeting 2024 22 March 2024 Half-year 2024 financial results 24 July 2024 EFG International I Half-year 2023 results 26 July 2023 Page 40
Slide 41: Contacts
Contacts Investors Media Investor Relations Marketing & Communications Jens Brueckner Daniela Haesler Head of Investor Relations Head of Marketing & Communications Phone +41 44 226 1799 Phone +41 44 226 1804 jens.brueckner@efginternational.com daniela.haesler@efginternational.com EFG International A