Efg International Ag · SIX:EFGN
Efg International — FY2015 Earnings Presentation
40 slides from Efg International's earnings presentation, Feb 22, 2016
Slide 1: Full-year results presentation 2015
Full-year results presentation 2015 Zurich, 22 February 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: Introduction; Financial performance; Current status, outlook
Introduction Financial performance Current status, outlook 3
Slide 4: Highlights of the year
Highlights of the year Strong rebound in NNA in 2H15 (7% annualised). Equal best half year since 2011 business review. Dynamic 2H15 growth in Continental Europe, Switzerland and Asia. UK steady annual growth. Revenues stable in core private banking business and up 3% in 2H15. Overall performance
Slide 5: Financial performance
Introduction Financial performance Current status, outlook 5
Slide 6: Financials summary
Financials summary 2015 vs. 2014 IFRS net profit CHF 57.1 m from CHF 61.4 m Pre-provision operating profit CHF 92.4 m from CHF 141.6 m Underlying recurring net profit* CHF 91.1 m from CHF 131.0 m Operating income CHF 696.7 m from CHF 716.6 m Revenue margin 85 bps from 89 bps Net new assets CHF 2.4 b
Slide 7: Financials summary (cont.)
Financials summary (cont.) 1H 2015 2H 2015 IFRS net profit CHF 48.0 m CHF 9.1 m Pre-provision operating profit CHF 57.0 m CHF 35.4 m Underlying recurring net profit* CHF 51.0 m CHF 40.1 m Operating income CHF 353.0 m CHF 343.7 m Revenue margin 87 bps 83 bps Net new assets CHF (0.3 bn) CHF 2.7 bn Net
Slide 8: 2015 Highlights
2015 Highlights Annualized NNA growth for 2H15 at 7%; rebound in NNA in 2H15 after performance in 1H15 reflected exit from certain non-strategic lending business Revenue-generating Average revenue- Net new assets RoAuM AuM generating AuM (in CHF bn) (in bps) (in CHF bn) (in CHF bn) FX impact Other i
Slide 9: Operating income – key components
Operating income – key components Core private banking revenues in 2H15 increased by 3% vs 1H15 Operating income components (in CHF m) Core private banking revenues for 2015 stable versus 2014 at CHF 640.7 m Core private banking revenues up 3% vs. 1H15 716.6 696.7 and only slightly below the 2H1
Slide 10: Operating income (I)
Operating income (I) Operating income down 3% vs 2014 Operating income Net commissions Net interest income Net other income (in CHF m) (in CHF m) (in CHF m) (in CHF m) 716.6 696.7 381.3 375.3 247.2 353.0 200.6 343.7 120.8 30.588.1 2014 2015 1H15 2H15 2014 2015 2014 2015 2014 2015 Weaker transactio
Slide 11: Operating income (II)
Operating income (II) Operating income negatively impacted by lower revenues from life insurance Change in operating income from FY 2014 to FY 2015 (in CHF m) Net interest income: Approx. CHF 15 m net 15.0 increase from lending: CHF 19 m higher average spreads on loans, more than 716.6 offsetting
Slide 12: Operating expenses
Operating expenses Operating expenses up 5% y-o-y, reflecting investment in growth – CROs as well as in compliance & risk functions Operating expenses Cost-income ratio* (in CHF m) (in %) 102 CROs have been hired during 2015, of which 36 in 1H15 and 66 in 2H15 604.3 89.1 Increased costs for new
Slide 13: Detailed analysis personnel expenses
Detailed analysis personnel expenses Personnel expenses continue to reflect investments in new CROs; close to 80% of y-o-y increase in personnel costs relate to investments in new CROs Breakdown personnel expenses (in CHF m) Main driver for increase personnel expenses is investments in new CROs (h
Slide 14: Update on cost reduction program
Update on cost reduction program As announced in November 2015 business update – need to fundamentally improve profitability and reset current cost base Cost reduction program initiated – targeting headcount reduction of 200 jobs; cost reductions of approx. 5% or CHF 30 million. Savings to be re
Slide 15: Underlying recurring net profit vs IFRS profit (I)
Underlying recurring net profit vs IFRS profit (I) 2015 underlying recurring net profit declined by 30% versus last year; reflects weaker performance in 2H15 2015 2014 (in CHF m) Life insurance (in CHF m) Life insurance One time payment of CHF 29.9 m, representing 1.9% of peak AuM falling within the
Slide 16: Underlying recurring net profit vs IFRS profit (II)
Underlying recurring net profit vs IFRS profit (II) 2H15 underlying recurring net profit declined by 21% vs. 1H15; excluding life insurance, underlying recurring net profit increased by 6% vs. 2H15 1H15 2H15 (in CHF m) Life insurance (in CHF m) Life insurance 3.0 51.0 48.0 3.6 40.1 6.9 21.4 46.9 44.
Slide 17: Growth and productivity drivers
Growth and productivity drivers Number of CROs increased by 5% in 2015, hiring geared to 2H15 Number of CROs AuM per CRO (in CHF m) 444 445 438 455 + 39% 217 456 462 444 191 440 179 180 174 156 1H14 2H14 1H15 2H15 2011 2012 2013 2014 2015 Excl. CROs hired in 2015 Note: continuing businesses only Ave
Slide 18: New CRO performance
New CRO performance 31% of CROs hired in 2015 have already passed break-even point Number of New CROs 71% of CROs hired in 2014 and retained 102 to date are profitable 98 31% of CROs hired in 2015 and retained 74 66 have already passed break-even point, up 52 from 17% in 1H15 47 37 30 36 At th
Slide 19: Revenue-generating AuM development
Revenue-generating AuM development Return to positive NNA growth in 2H15; shows anticipated rebound after 1H15 reflected exit from certain non-strategic lending business Revenue-generating AuM evolution (in CHF bn) Annualized NNA growth for 2H15 at approx. 7%, in line with target range 2.4 Avera
Slide 20: AuM and NNA by business region
AuM and NNA by business region Return to positive NNA growth in Switzerland very strong performance in Continental Europe Dec 2015 AuMs as % of RoAuM 2015 NNA: CHF 2.4 bn NNA growth CHF 83.3 bn total AuM (in bps) (in %) Switzerland 15.0 18% 104 0.6 4% Continental 17.6 21% 74 2.2 14% Europe Asia 16.2
Slide 21: NNA by business region
NNA by business region Accelerating positive performance in Continental Europe and Switzerland during 2H15; Asia shows marked improvement versus 1H15 Annualized Annualized 1H15 NNA: CHF (0.3 bn) 2H15 NNA: CHF 2.7 bn NNA growth NNA growth (in %) (in %) Switzerland 0.0 0% 0.6 9% Continental Europe 0.6
Slide 22: Balance sheet
Balance sheet Balance sheet expansion driven by increase in deposits (up 9% vs. 1H15) Total assets: CHF 26.8 bn Total liabilities & equity: CHF 26.8 bn Due to banks 0.5 Higher RWAs due to Cash & banks 7.0 regulatory changes as highlighted in 1H15 Treasury bills 0.7 Loan-deposit ratio at 52% Avai
Slide 23: Capital position (I)
Capital position (I) Continued strong capital position, decline mainly due to regulatory changes BIS total capital ratio Breakdown of RWAs (in %) (in CHF bn) Higher RWAs due to regulatory changes as highlighted in 1H15 18.7 18.0 16.8* 5.8 6.2 Leverage ratio (FINMA) at 4.2 0.3 0.3 3.1% vs. 3.4% a
Slide 24: Capital position (II)
Capital position (II) Underlying capital generation added 190 bps to capital ratio for 2015, offset by increase in RWAs, DoJ & other legal and litigation costs and pension costs Evolution of BIS capital ratio (in %) One-off impact of 180 bps 1.9 18.7 4.5 (1.3) (0.5) 16.8 Common Equity (CET1) (0.5) (
Slide 25: Adoption of a progressive dividend policy commenced
Adoption of a progressive dividend policy commenced Proposed dividend of CHF 0.25 in line with last year; payout ratio increased to 42% Dividend per share (in CHF) & Payout ratio (in %) Dividend proposal for 2016 2015 42% IFRS underlying net profit (in CHF m) 91.1 29% 27% Total amount of proposed or
Slide 26: Life insurance policies portfolios
Life insurance policies portfolios Impact of life insurance portfolio on current financials Portfolio “Held to Maturity”* Carrying value CHF 815.7 m (acquisition cost, premium paid, accrued interest) Net revenues in 2015 on life portfolios of CHF 0.1 m (FY 2014: CHF 22.8 m); 1H15: CHF 6.9 m, 2
Slide 27: Life insurance policies re-underwriting
Life insurance policies re-underwriting Portfolio “Held to Maturity” Re-underwriting project announced at half-year has been successfully completed: All policies have been reviewed by an independent medical underwriting company with a historical track record of high accuracy Based on updated i
Slide 28: Current status, outlook
Introduction Financial performance Current status, outlook 28
Slide 29: Significant investment in CRO hiring / productivity
Significant investment in CRO hiring / productivity Number of CROs stood at 462 at end-2015, up 5% from 440 a year earlier Major CRO hiring programme - 102 CROs recruited (66 in 2H15); nearly a third already profitable. Emphasis on high quality individuals and teams Offset by 80 CRO departures
Slide 30: Delivering growth
Delivering growth After challenging 1H15, strong rebound in growth in 2H15. Dynamic performances from Continental Europe, Switzerland and Asia. Steady annual growth in UK Continental Europe UK • NNA growth of 14%. Very strong performance across • Steady NNA growth within target board: Monaco (18%);
Slide 31: Strong focus on executing cost reduction programme
Strong focus on executing cost reduction programme Need to reset cost base a key business priority Cost reduction programme targeting reduction of 5% (approx. CHF 30 m) in full by end- 2016 Measures identified include efficiency improvements and reduction of 200 jobs Solid progress made acro
Slide 32: Practitioners of the craft of private banking
Practitioners of the craft of private banking www.efginternational.com 32
Slide 33: Appendix
Appendix EFG@ International
Slide 34: Consolidated income statement (IFRS)
Consolidated income statement (IFRS) (in CHF million) 2014 2015 Net interest income 247.2 200.6 Net banking fee & commission income 381.3 375.3 Net other income 88.1 120.8 Operating income 716.6 696.7 Personnel expenses (418.8) (436.1) Other operating expenses (141.4) (154.2) Amortisation of tangibl
Slide 35: Consolidated income statement (IFRS)
Consolidated income statement (IFRS) (in CHF million) 1H 2015 2H 2015 Net interest income 100.2 100.4 Net banking fee & commission income 190.5 184.8 Net other income 62.3 58.5 Operating income 353.0 343.7 Personnel expenses (216.8) (219.3) Other operating expenses (72.5) (81.7) Amortisation of tang
Slide 36: Consolidated balance sheet (IFRS)
Consolidated balance sheet (IFRS) (in CHF million) Dec 2014 Dec 2015 Cash and balances with central banks 2,855 4,862 Treasury bills and other eligible bills 626 757 Due from other banks 2,109 2,168 Loans and advances to customers 13,031 12,062 Derivative financial instruments 569 735 Financial inst
Slide 37: Breakdown of Assets under Management
Breakdown of Assets under Management 31.12.15 By category 31.12.14 31.12.15 (in CHF bn) Cash & Deposits 26% 27% 22.6 Bonds 20% 20% 16.2 Equities 26% 27% 22.3 Structured products 3% 3% 2.4 Loans 16% 14% 12.1 Hedge Funds / Funds of HFs 4% 4% 3.3 Other 5% 5% 4.4 Total 100% 100% 83.3 31.12.15 By currenc
Slide 38: Segmental analysis – 2015
Segmental analysis – 2015 Investment Performance summary Continental Corporate Switzerland Americas UK Asia and 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) (120.4) (92.1) (6
Slide 39: Segmental analysis – 2014
Segmental analysis – 2014 Investment Performance summary Continental Corporate Switzerland Americas UK Asia and Wealth Eliminations Total (in CHF m) Europe center Solutions Segment revenues 151.1 120.5 106.8 170.8 116.6 150.5 22.3 (122.0) 716.6 Segment expenses (112.3) (89.3) (81.3) (111.4) (83.4) (
Slide 40: Contacts
Contacts Investors & Media EFG International Investor Relations Jens Brueckner, Head of Investor Relations Telephone: +41 44 226 1799 E-mail: jens.brueckner@efginternational.com EFG International AG, Bleicherweg 8, 8001 Zurich, Switzerland Telephone: +41 44 212 73 77 Fax: +41 44 226 18 55 www.efgint