Efg International Ag · SIX:EFGN
Efg International — H1 2013 Earnings Presentation
40 slides from Efg International's earnings presentation, Jul 24, 2013
Slide 1: Half-year results presentation 2013
Half-year results presentation 2013 Zurich, 24 July 2013 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 or redemption of any securities
Slide 3: Introduction
1.0 Introduction John Williamson, CEO Financial 2.0 performance Current status, 3.0 outlook 3
Slide 4: Financials summary - incl. EFG FP
Financials summary - incl. EFG FP vs. 1H 12 vs. 2H 12 IFRS net profit CHF 84.5 m 58.8% 45.7% IFRS net profit attributable to ordinary shareholders CHF 83.8 m 71.3% 54.6% Underlying recurring net profit to ordinary shareholders* CHF 60.3 m 5.6% Unchanged Operating income CHF 381.8 m 6.7% 8.1% Revenue
Slide 5: Financials summary – excl. EFG FP
Financials summary – excl. EFG FP vs. 1H 12 vs. 2H 12 IFRS net profit CHF 47.7 m 1.3% 11.5% IFRS net profit attributable to ordinary shareholders CHF 47.0 m 9.8% 6.2% Underlying recurring net profit to ordinary shareholders CHF 60.3 m 5.6% Unchanged Operating income CHF 330.3 m 4.8% 6.2% Revenue mar
Slide 6: Highlights of the half year
Highlights of the half year • Strong rise in H1 profits, largely reflecting sale of remaining stake in EFG Financial Products. • Underlying profit constrained by lower profits from asset & liability management; subdued specialist structuring transactions relating to large clients (together equivalen
Slide 7: Financial performance
1.0 Introduction Financial Giorgio Pradelli, CFO 2.0 performance Current status, 3.0 outlook 7
Slide 8: 1H 2013 Highlights (I)
1H 2013 Highlights (I) Net new assets in target range; RoAuM reflects reduction in structuring transactions relating to large clients and lower revenues from asset and liability management Revenue-generating AuM Net new assets* RoAuM (excl. EFG FP) (in CHF bn) (in CHF bn) (in bps) Other income Commi
Slide 9: 1H 2013 Highlights (II)
1H 2013 Highlights (II) Further reduction in operating expenses – net profit excl. EFG FP up by 10% Operating income Operating expenses (in CHF m) (in CHF m) Decrease in operating income due to reduction in structuring 409.1 transactions relating to large clients 381.8 -7% 328.2 and lower revenues
Slide 10: 1H 2013 Highlights (III)
1H 2013 Highlights (III) Capital quality and quantity continued to strengthen BIS total capital ratio (in %) Tripled common equity (from 4.1% to 13.5%) in last 18 months as well as absorbing Basel III 18.1 18.0 impacts 1.0 15.9 15.1 ** 4.2 Increase of BIS total capital ratio 12.9 0.9 5.2 0.1 4.2
Slide 11: Underlying recurring net profit vs reported IFRS profit
Underlying recurring net profit vs reported IFRS profit Underlying profit constrained by market conditions, absence of structuring transactions relating to large clients and lower revenues from asset and liability management (circa 9 bps on RoAuM). Quality of earnings significantly improved 1H13 1H1
Slide 12: Underlying recurring net profit vs reported IFRS profit
Underlying recurring net profit vs reported IFRS profit 1H 2013 underlying recurring profit in line with 2H 2012 despite absence of structuring transactions relating to large clients and lower revenues from asset and liability management (circa 4 bps on RoAuM) 1H13 2H12 (in CHF m) (in CHF m) 9.6 84.
Slide 13: Operating income
Operating income Operating income lower due to reduction in structuring transactions relating to large clients and lower revenues from asset and liability management Operating income Net interest income (excl. EFG FP) Net commissions (excl. EFG FP) Net other income (excl. EFG FP) (in CHF m) (in CHF
Slide 14: Operating expenses
Operating expenses Cost discipline maintained, total operating expenses declined by 8% y-o-y and 30% since June 2011 (business review) Operating expenses Cost-income ratio* (excl. EFG FP) (in CHF m) (in %) 378.3 Development reflects cost savings achieved 101.0% 79.5% 78.9% 78.3% 302.1 328.2 329.9
Slide 15: Detailed analysis of headcount & personnel expenses
Detailed analysis of headcount & personnel expenses Continued reduction of personnel expenses Headcount (excl. EFG FP) (period-end) Breakdown personnel expenses (excl. EFG FP) (in CHF m) 2,313 202.6 204.7 2,099 0.8 202.0 197.0 1,994 3.4 51.1 6.7 51.3 1,977 54.1 47.1 17.6 2.5 10.1 151.5 1.8 135.0 134
Slide 16: Capital position (I)
Capital position (I) RWAs decreased due to sale of EFG FP BIS total capital ratio Breakdown of RWAs (in %) (in CHF bn) Significant improvement in CET 1 and BIS total capital 6.0 over last 18 months 18.0 18.1 5.6 1.0 15.9 0.6 15.1 0.3 ** 4.2 De-risking of balance 12.9 0.9 5.2 1.4 1.3 0.1 4.2 0.3
Slide 17: Capital position (II)
Capital position (II) Positive capital development and organic capital generation. New capital objectives, more progressive dividend policy going forward Evolution of BIS capital ratio (in %) 18.1 18.0 1.2 Basel III 1.0 impact: 4.5 15.9 (0.1) 6.2 220 bps 4.2 13.5 Common Equity 11.9 11.7 Additional T
Slide 18: Revenue-generating AuM development
Revenue-generating AuM development Net new asset generation in target range (CHF bn) CHF 1.9 bn NNA for 0.6 0.4 continuing businesses 2.5* excl. EFG FP annualized (0.1) (4.5) 0.6 growth rate of 5% 78.7 1.9 76.0 Adjusted for one-off single (1.0) stock outflow annualized 74.1 growth rate of 7% D
Slide 19: AuM and NNA by business region
AuM and NNA by business region Jun 2013 AuMs 1H 2013 NNA: CHF 1.9 / 2.5 bn**** CHF 76.0 bn Annualized as % of RoAuM NNA growth total AuM (in bps) (in %) Switzerland* 18.8 25% 97 (0.3) 0.3**** -4% 4% Continental 17% 12.8 75 0.8 14% Europe Asia 14.8 20% 78 0.5 7% Americas 8.5 11% 89 (0.0) -0.3% UK 17.
Slide 20: Balance sheet
Balance sheet Strong, liquid and simplified post deconsolidation of EFG FP Total assets: CHF 22.1 bn Total liabilities & equity: CHF 22.1 bn Cash & banks 4.3 Due to banks 0.3 Growth in deposits exceeded Deposits 16.7 growth in loans Treasury bills 1.4 Current composition reflects Available decon
Slide 21: Life insurance policies portfolios
Life insurance policies portfolios Impact of life insurance portfolio on current financials Portfolio “Held to Maturity”* - Carrying value CHF 724 million (acquisition cost, premium paid, accrued interest); with actual yield of 4.4% Net revenues in 1H13 on life portfolios of CHF 18.0 million (1H
Slide 22: Current status, outlook
1.0 Introduction Financial 2.0 performance Current status, 3.0 John Williamson, CEO outlook 22
Slide 23: Most private banking businesses performing strongly
Most private banking businesses performing strongly UK Continental Europe Double-digit growth in operating Double-digit growth in operating income and income and over 20% growth in doubling of pre-tax contribution. pre-tax contribution. Switzerland (including Caribbean) Signs of improvement in Swiss
Slide 24: Business back in net CRO hiring mode
Business back in net CRO hiring mode • Total number of CROs (excluding EFG Financial Products): 416 end-June 2013, up from 414 end-2012. • Focus remains on high quality individuals and, in particular, teams. • Returned to net CRO hiring mode, with solid progress in: • UK (+4) • Americas (+3) • Switz
Slide 25: Focus on delivering controlled, profitable growth
Focus on delivering controlled, profitable growth Seeking to derive revenue and profit upside across number of business drivers CRO recruitment • Pipeline continues to improve. • During H2, will be announcing senior appointments in both Switzerland and Hong Kong - experienced individuals who will ad
Slide 26: Committed to cost discipline & regulatory compliance
Committed to cost discipline & regulatory compliance • Committed to maintaining strong cost discipline. • Non-CRO hiring freeze remains in place. • Exception: industry-wide regulatory / risk management requirements. • Also a strong commitment to regulatory compliance. • No doubt: a pre-requisite to
Slide 27: Relocating Zurich head office
Relocating Zurich head office • In Q4 2013, moving Zurich head office from Bahnhofstrasse to prime property at Bleicherweg 8. • Close to Paradeplatz; in heart of Zurich's financial district. • Cost broadly comparable to old premises, but considerably more space. Reflects ambition to grow business si
Slide 28: Focus on organic growth, but open to making acquisitions
Focus on organic growth, but open to making acquisitions • Short- to medium-term focus on organic growth. Delivering on latent potential offers most significant short-term upside to shareholder value. • However, open to making acquisitions. • Must be shared appreciation of private banking, and compl
Slide 29: Significant upside profit potential
Significant upside profit potential Aim is for top-line growth to flow through with minimal dilution to productivity and profits. Potential to deliver strong, double digit growth for foreseeable future. Significant potential upside as a result of market factors and business drivers. Illustrative rev
Slide 30: Committed to delivering medium-term objectives
Committed to delivering medium-term objectives Remain committed to medium-term objectives through delivering controlled, profitable growth: • Net new assets in the range 5-10% per annum. • Reduced cost-income ratio - to below 75% by 2014. • Continue to strengthen capital. Business review target of 1
Slide 31: Practitioners of the craft of private banking
Practitioners of the craft of private banking www.efginternational.com 31
Slide 32: Appendix
4.0 Appendix 32
Slide 33: Consolidated income statement (IFRS)
Consolidated income statement (IFRS) (in CHF million) 1H 2012* 2H 2012* 1H 2013 Net interest income 116.8 108.1 99.5 Net banking fee & commission income 236.7 255.0 216.8 Net other income 55.6 52.4 65.5 Operating income 409.1 415.5 381.8 Personnel expenses (234.0) (232.8) (219.3) Other operating exp
Slide 34: Consolidated balance sheet (IFRS)
Consolidated balance sheet (IFRS) (in CHF million) Dec 2012* Jun 2013 Cash and balances with central banks 1,364 1,419 Treasury bills and other eligible bills 817 1,372 Due from other banks 3,393 2,873 Derivative financial instruments 563 465 Financial instruments 6,113 4,448 Loans and advances to c
Slide 35: Breakdown of Assets under Management
Breakdown of Assets under Management 30.06.13 By category 31.12.12 30.06.13 (in CHF bn) Cash & Deposits 25% 27% 20.3 Bonds 20% 21% 15.8 Equities 23% 25% 19.3 Structured products 8% 3% 2.2 Loans 14% 15% 11.4 Hedge Funds / Funds of HFs 5% 4% 3.3 Other 5% 5% 3.7 Total 100.0% 100.0% 76.0 30.06.13 By cur
Slide 36: Segmental analysis – 1H 2013
Segmental analysis – 1H 2013 Performance Continental Asset Corporate summary Switzerland Americas UK Asia EFG FP Eliminations* Total Europe Management center (in CHF m) Segment revenues 94.4 46.6 37.9 81.7 58.2 38.1 51.5 6.4 (33.0) 381.8 Segment expenses (70.0) (33.7) (29.8) (52.0) (39.6) (16.9) (32
Slide 37: Segmental analysis – 2H 2012
Segmental analysis – 2H 2012 Performance Continental Asset Corporate summary Switzerland Americas UK Asia EFG FP Eliminations* Total Europe Management center (in CHF m) Segment revenues 99.4 46.4 49.6 81.9 59.1 33.1 63.5 11.2 (28.7) 415.5 Segment expenses (71.5) (32.5) (32.4) (59.5) (35.7) (16.4) (4
Slide 38: Segmental analysis – 1H 2012
Segmental analysis – 1H 2012 Performance Continental Asset Corporate summary Switzerland Americas UK Asia EFG FP Eliminations* Total Europe Management center (in CHF m) Segment revenues 100.5 38.8 48.7 72.2 49.9 24.9 62.1 33.8 (21.8) 409.1 Segment expenses (74.1) (31.9) (31.7) (48.3) (36.6) (13.6) (
Slide 39: Overview of sovereign and bank exposure
Overview of sovereign and bank exposure GIIPS exposure further reduced (in CHF m) 30 June 2013 31 December 2012 Bank Bank Country Sovereign Bank bonds placements & Sovereign Bank bonds placements & other other Italy 12.7 - 0.8 12.5 - 1.2 Portugal - - - - 20.0 - Spain 62.1 - 23.9* 64.7 - 39.5* Direct
Slide 40: Contacts
Contacts Media Investors Strategy, Marketing & Communications EFG International Investor Relations Keith Gapp, Head of Strategy and Marketing Jens Brueckner, Head of Investor Relations Telephone: +41 44 226 1217 Telephone: +41 44 226 1799 E-mail: keith.gapp@efginternational.com E-mail: jens.brueckne