Slide 1: Half-year results presentation 2016
Half-year results presentation 2016 Zurich, 27 July 2016 Practitioners of the craft of private banking 1
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: (This page has been intentionally left blank)
(This page has been intentionally left blank) 3
Slide 4: Introduction – Joachim H. Straehle, CEO
Introduction Joachim H. Straehle, CEO Financial performance Current status, outlook 4
Slide 5: Highlights of 1H 2016
Highlights of 1H 2016 Results reflect difficult market conditions and strong headwinds faced by the entire financial services industry Achieved stable core private banking income compared to the prior-year period; revenue margin slightly improved versus 2H 2015 Net new assets were flat over th
Slide 6: Financial performance – Giorgio Pradelli, Deputy CEO & CFO
Introduction Financial performance Giorgio Pradelli, Deputy CEO & CFO Current status, outlook 6
Slide 7: Financials summary
Financials summary 1H 2016 vs. 1H 2015 vs. 2H 2015 Underlying recurring net profit*, CHF m 38.1 44.1 46.9 IFRS net profit, CHF m 22.3 48.0 9.1 Pre-provision operating profit, CHF m 43.1 57.0 35.4 Operating income, CHF m 341.7 353.0 343.7 Revenue margin, in bps 84 87 83 Net new assets, CHF bn (0.1) (
Slide 8: 1H 2016 Highlights
1H 2016 Highlights RoAuM slightly up from 2H 2015 level; NNA flat over the period, but positive momentum towards end of 1H 2016 Revenue-generating AuM Average revenue-generating Net new assets RoAuM (in CHF bn) AuM (in CHF bn) (in CHF bn) (in bps) FX impact Other income RoAuM on AuM Annualized growt
Slide 9: Operating income – key components
Operating income – key components Core private banking revenues slightly up vs. 1H 2015 Underlying operating income components (in CHF m) Core private banking revenues up 1% vs. same period last year but down 2% vs. 2H 2015 Net commission income declined due to lower 346.1 350.5 client activity
Slide 10: Operating income (I)
Operating income (I) Underlying operating income down 1% year-on-year, driven by decline in net commission income, offset by positive effect of loan repricing Underlying operating income Underlying net commissions Underlying net interest income Underlying net other income (in CHF m) (in CHF m) (in C
Slide 11: Operating income (II)
Operating income (II) Operating income negatively impacted by lower income from commissions Change in underlying operating income from 1H 2015 to 1H 2016 (in CHF m) Net interest income: Since 1H 2015 loan spreads have increased by 14 bps which on average loans of CHF 12 bn 8.0 increases interest i
Slide 12: Update on cost reduction programme – FTE reduction
Update on cost reduction programme – FTE reduction Cost reduction programme is expected to result in reduction of more than 250 FTEs, substantially above the initially announced target in Nov 2015 Evolution of FTEs 254 Initial target announced in Nov 2015 was headcount reduction 2,144 2,183 2,103
Slide 13: Variation in FTEs from June 2015 – June 2016
Variation in FTEs from June 2015 – June 2016 Global FTE reduction Evolution of FTEs Cost reduction programme started Start of cost reduction in Oct 2015, programme Announcement of cost reduction announced on 23 programme Nov 2015, swift 2,183 2,162 implementation 2,155 2,137 afterwards 2,121 2,124
Slide 14: Operating expenses
Operating expenses Underlying operating expenses decreased vs 2H 2015, reflecting realisation of cost reduction programme Underlying operating expenses Underlying cost-income ratio* (in CHF m) (in %) 297.0 84.1 84.9 83.5 291.0 292.5 1H15 2H15 1H16 1H15 2H15 1H16 Underlying personnel expenses Underly
Slide 15: Update on cost reduction programme – operating expenses
Update on cost reduction programme – operating expenses Strong progress made in implementing cost reduction programme, ahead of plan Evolution of underlying operating expenses Evolution of underlying operating expenses (in CHF m) (in CHF m) 36.0 624.0* - 57 - 19 - 38 588.0 312.0* 566.5 15.0 - 12% 29
Slide 16: Pre-provision profit
Pre-provision profit Underlying operating income (in CHF m) Underlying pre-provision operating profit (in CHF m) 346.1 350.5 342.5 1H15 2H15 1H16 55.1 53.5 50.0 Underlying operating expenses (in CHF m) 297.0 1H15 2H15 1H16 292.5 291.0 1H15 2H15 1H16 16
Slide 17: Growth and productivity drivers
Growth and productivity drivers Number of CROs declined, mainly driven by performance management to improve CRO productivity and lower level of hiring Number of CROs AuM per CRO (in CHF m) 445 445 455 448 + 10% 462 197 444 424 191 440 190 179 180 174 2H14 1H15 2H15 1H16 2012 2013 2014 2015 1H16 Excl
Slide 18: New CRO performance
New CRO performance Already more than 50% of the CROs hired and retained during 2015 are profitable, ahead of plan Number of New CROs 86% of CROs hired in 2014 and retained to 102 date are profitable 85 74 66 54% of CROs hired during 2015 and retained 42 46 are already profitable 36 36 25 15 15
Slide 19: Revenue-generating AuM development
Revenue-generating AuM development Revenue-generating AuMs negatively impacted by FX and market performance Revenue-generating AuM evolution (in CHF bn) Annualized NNA growth for 1H 2016 at approx. -0.1% Average revenue-generating AuMs up 1% 83.3 year-on-year (2.0) (0.6) (0.1) 80.6 Currency mo
Slide 20: AuM and NNA by business region
AuM and NNA by business region Steady NNA growth in the UK, continued positive growth in Switzerland and Continental Europe. Negative NNA growth in Asia and Latin America, driven by client deleveraging and difficult market conditions Jun 2016 AuMs 1H 2016 NNA: as % of RoAuM NNA growth CHF 80.6 bn CH
Slide 21: Balance sheet
Balance sheet Total equity increased substantially as a result of recent capital increase to support the financing of the BSI transaction. Balance sheet liquid and strong Total assets: CHF 27.0 bn Total liabilities & equity: CHF 27.0 bn Due to banks 0.4 Loan-deposit ratio at 49% Cash & banks 7.6
Slide 22: Capital position (I)
Capital position (I) Basel III fully applied CET1 ratio at 18.5% and BIS total capital ratio at 22.8%. The increase of both ratios is driven by recent capital increase (issuance of 48.2 m shares) and resulting in net proceeds of CHF 281 m BIS total capital ratio Breakdown of RWAs (in %) (in CHF bn)
Slide 23: Capital position (II)
Capital position (II) Underlying organic capital generation and RWA decrease contributed to capital ratio improvement of 200 bps Evolution of BIS capital ratio (in %) One-off impact of 460 bps 1.4 0.1 22.8 4.6 0.6 (0.2) 4.3 (0.5) 16.8 18.5 4.0 Common Equity (CET1) Additional Tier 1 & Tier 2 12.8 Dec
Slide 24: Life insurance policies portfolios
Life insurance policies portfolios Impact of life insurance portfolio on current financials Portfolio “Held to Maturity”* Carrying value USD 811 m / CHF 793 m (acquisition cost, premium paid, accrued interest) Net revenues in 1H 2016 on life portfolios of CHF (0.8 m) vs. 1H 2015: CHF 6.9 m and
Slide 25: 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 will be challenged in the US courts Transamerica and AXA increased premiums by significant and unjustified levels Strong legal claim We will chal
Slide 26: Current status, outlook – Joachim H. Straehle, CEO
Introduction Financial performance Current status, outlook Joachim H. Straehle, CEO 26
Slide 27: Current status - EFG
Current status - EFG Resilient results in our core private banking business Sharpened focus on CRO performance and efficiency Strong progress in cost reduction program, ahead of plan Growing NNA and total AuM Focus on increasing revenue generation and profitability 27
Slide 28: Regional business development
Regional business development Continental Europe UK • NNA growth of approx. 4%, good performance in • Continued steady NNA growth at 5% Monaco (8%) and Luxembourg (5%), positive performance in Spain • Operating income and pre-provision profit were up year-on-year by 7% and 16%, respectively Asia Ame
Slide 29: Current status – BSI transaction
Current status – BSI transaction Financing process of the acquisition of BSI completed Ahead of plan on the business combination with BSI New management structure (as after closing) announced on 5 July 2016 Fully committed to transaction, convinced of the merits of the business combination
Slide 30: BSI Integration well on track, closing expected by 4Q 2016
BSI Integration well on track, closing expected by 4Q 2016 Phase 0 Phase 1 Phase 2: Preparation Integration concept Integration and customer migration February 22 November 2016 Q4 2016 Q1 2017 Q4 2017 Signing Singapore Assets Closing transfer Today One bank for One face to One face to Announcement b
Slide 31: EFG International Executive Committee (effective as of closing)
EFG International Executive Committee (effective as of closing) Currently EFG Currently BSI CEO J. Straehle CFO & Deputy Strategy CEO P. Fischer G. Pradelli IT and Ops M. Bagnall Global Markets Risk M. Moranzoni R. Kunz Region Region Romandie Region Central Region Region Investment and Continental U
Slide 32: Update on BSI transaction & integration: De-risking the acquisition (I)
Update on BSI transaction & integration De-risking the acquisition (I) Purchase price adjustment mechanism Preliminary purchase price subject to adjustments (up or down) for: Changes in IFRS tangible book value Net new money differences between 30-Nov-2015 and closing, if such difference is hi
Slide 33: Update on BSI transaction & integration: De-risking the acquisition (II)
Update on BSI transaction & integration De-risking the acquisition (II) Indemnities for BSI legal risks BTG has agreed to indemnify EFG against certain damages relating to breaches of: any representations and warranties covenants and obligations other matters related to specific legal cases
Slide 34: Update on BSI transaction
Update on BSI transaction Completion of ordinary share capital increase – gross proceeds of CHF 295 million Received approval from FINMA regarding the proposed acquisition of BSI Completed legal filing across 20+ jurisdictions Announced future management structure after closing of acquisitio
Slide 35: Update on BSI transaction – next steps
Update on BSI transaction – next steps Closing of the BSI transaction expected by 4Q 2016 Singapore integration by the end of November 2016 at the latest Legal integration in Switzerland mid-2017 Legal integrations in other jurisdictions by 2Q/3Q 2017 Migration of BSI’s business to EFG’s I
Slide 36: Key conclusions
Key conclusions BSI acquisition is an important milestone for the future of EFG Integration on track Enhanced offering will increase profitability Cost measures at EFG have been successfully implemented Solid, profitable due to synergies for the integrated, combined bank Swiss financial
Slide 37: Practitioners of the craft of private banking
Practitioners of the craft of private banking www.efginternational.com 37
Slide 38: Appendix
Appendix EFG@ International
Slide 39: Consolidated income statement (IFRS)
Consolidated income statement (IFRS) (in CHF million) 1H 2015 2H 2015 1H 2016 Net interest income 100.2 100.4 102.3 Net banking fee & commission income 190.5 184.8 174.7 Net other income 62.3 58.5 64.7 Operating income 353.0 343.7 341.7 Personnel expenses (216.8) (219.3) (217.0) Other operating expe
Slide 40: Consolidated balance sheet (IFRS)
Consolidated balance sheet (IFRS) (in CHF million) Dec 2015 Jun 2016 Cash and balances with central banks 4,862 5,360 Treasury bills and other eligible bills 757 799 Due from other banks 2,168 2,217 Loans and advances to customers 12,062 11,575 Derivative financial instruments 735 825 Financial inst
Slide 41: Breakdown of Assets under Management
Breakdown of Assets under Management 30.06.16 By category 31.12.15 30.06.16 (in CHF bn) Cash & Deposits 27% 27% 22.1 Bonds 20% 20% 16.5 Equities 27% 27% 20.7 Structured products 3% 3% 2.5 Loans 14% 14% 11.6 Hedge Funds / Funds of HFs 4% 4% 2.9 Other 5% 5% 4.3 Total 100% 100% 80.6 30.06.16 By currenc
Slide 42: Segmental analysis – 1H 2016
Segmental analysis – 1H 2016 Investment Performance summary Continental Corporate Switzerland Americas UK Asia and Wealth Eliminations Total (in CHF m) Europe center Solutions Segment revenues 73.0 60.7 50.2 81.4 62.6 68.6 (3.1) (51.7) 341.7 Segment expenses (62.0) (45.4) (41.0) (59.9) (42.2) (31.4)
Slide 43: Segmental analysis – 1H 2015
Segmental analysis – 1H 2015 Investment Performance summary Continental Corporate Switzerland Americas UK Asia and Wealth Eliminations Total (in CHF m) Europe center Solutions Segment revenues 71.3 56.9 50.4 85.0 60.5 81.1 12.7 (64.9) 353.0 Segment expenses (58.6) (43.6) (42.3) (56.8) (45.9) (31.6)
Slide 44: Operating income – key components
Operating income – key components Core private banking revenues slightly up vs. 1H 2015 Operating income components (in CHF m) Core private banking revenues up 1% vs. same period last year but down 2% vs. 2H 2015 Net commission income declined due to lower 353.0 343.7 341.7 client activity durin
Slide 45: Operating income (I)
Operating income (I) Operating income down 3% year-on-year, driven by decline in net commission income, reflecting lower levels of client activity Operating income Net commissions Net interest income Net other income (in CHF m) (in CHF m) (in CHF m) (in CHF m) 190.5 353.0 184.8 343.7 174.7 341.7 100
Slide 46: Operating income (II)
Operating income (II) Operating income negatively impacted by lower income from commissions Change in operating income from 1H 2015 to 1H 2016 (in CHF m) Net interest income: Since 1H 2015 loan spreads have increased by 14 bps which on average loans of CHF 12 bn 8.0 increases interest income by CH
Slide 47: Operating expenses
Operating expenses Underlying operating expenses increased slightly vs 2H 2015, reflecting major investment in CRO growth during 2H15 and beginning of cost reduction programme Operating expenses Cost-income ratio* (in CHF m) (in %) Adjustments to opex for underlying opex Adjusted CIR (based on under
Slide 48: Detailed analysis personnel expenses
Detailed analysis personnel expenses Personnel expenses reflect investment in new CROs during 2H 2015 Breakdown personnel expenses (in CHF m) Increase of personnel expenses for new CROs from CHF 4.1 m in 1H 2015 to CHF 12.3 m in 1H 2016 219.3 217.0 216.8 Fixed compensation for PB business declin
Slide 49: Underlying recurring net profit vs IFRS profit
Underlying recurring net profit vs IFRS profit Underlying recurring net profit excl. life insurance declined by 14% vs 1H 2015 1H 2016 1H 2015 (in CHF m) (in CHF m) 3.0 48.0 44.1 2.0 0.8 38.1 (6.9) 3.8 3.1 3.0 0.6 2.5 22.3 IFRS Exceptional Life 1H15 Underlying IFRS Exceptional CRO BSI BSI Cost savin
Slide 50: Breakdown of targeted synergies
Breakdown of targeted synergies (as announced on 31 March 2016) Cost synergies mainly driven by IT % of Amount % of combined (in CHF m) Total costs Key actions Migrating to in-house platform IT, OPs & 59% 110 35% Economies of scale in Global Operations Premises CHF 10m savings on premises Corp
Slide 51: 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