Efg International Ag · SIX:EFGN
Efg International — H1 2012 Earnings Presentation
44 slides from Efg International's earnings presentation, Jul 25, 2012
Slide 1: Half-year results presentation 2012
Half-year results presentation 2012 Zurich, 25 July 2012 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 2.0 Performance Current status, 3.0 outlook 3
Slide 4: Financials summary
Financials summary vs. 1H 11 vs. 2H 11 IFRS net profit CHF 53.1 m 5.0% NM IFRS net profit attributable to ordinary shareholders CHF 48.8 m 3.0% NM Underlying IFRS net profit* CHF 74.1 m 33% 168% Operating income CHF 409.1 m 3.3% 11.4% Revenue margin 104 bps Up from 95 bps Up from 94 bps Net new asse
Slide 5: Good progress implementing business review
Good progress implementing business review Exited loss-making or marginal businesses / locations: • All loss-making businesses exited / being exited. • Locations reduced by 20 - focus now on most compelling elements. Improved capital structure and position: • Composition improved by conversion exerc
Slide 6: Refocused & reset - a private bank back on track
Refocused & reset - a private bank back on track Now a highly focused private bank. • Number of non-private banking businesses exited. • EFG AM an integral part of private banking • EFG Financial Products earmarked for an IPO. On track to deliver net P&L benefit as per business review. Business now
Slide 7: Performance
1.0 Introduction 2.0 Performance Giorgio Pradelli, CFO Current status, 3.0 outlook 7
Slide 8: Key performance indicators (I)
Key performance indicators (I) Return to positive momentum in net new assets Average revenue-generating AUM Net new assets RoAUM (in CHF bn) (in CHF bn) (in bps) Other income Commission Net interest 83.8 78.3 104 78.0 95 94 14 7 17 2.7 60 59 54 1.2* (1.1)** 29 30 (2.1)* 23 1H11 2H11 1H12 1H11 2H11 1
Slide 9: Key performance indicators (II)
Key performance indicators (II) Revenues and profits holding up despite challenging business conditions Operating income IFRS net profit (in CHF m) (in CHF m) 55.9 53.1 409.1 396.0 +11% 367.2 1H11 1H12 (350.0) 1H11 2H11 1H12 2H11 9
Slide 10: Underlying net profit versus reported IFRS profit
Underlying net profit versus reported IFRS profit 1H 2012 IFRS net profit reflects financial impact of business review measures (in CHF m) 9.6 74.1 Summary Business review impact (in CHF m) 11.4 Disposals 7.1 55.9 Closure costs for businesses exited* (8.1) 53.1 Net operating losses of businesses bei
Slide 11: Significant progress in relation to business review
Significant progress in relation to business review Business review (Oct 2011) Status 1H 2012 results Strategic resetting of business All businesses identified either sold or expecting closure EFG FP IPO preparations advanced Operating measures Private banking CRO reduction by 68 from 508 to 440 (do
Slide 12: Operating income
Operating income Robust operating income despite challenging business conditions and business review impact Net interest Net commissions Net other income (in CHF m) (in CHF m) (in CHF m) 242.9 122.6 236.7 67.1 116.8 XXX 211.0 55.6 89.1 30.5 1H11 2H11 1H12 1H11 2H11 1H12 1H11 2H11 1H12 Lower yield on
Slide 13: Operating expenses
Operating expenses Progressing towards target CIR of 75% Personnel expenses (in CHF m) Other operating expenses (in CHF m) Cost-income ratio (in %) 134.3 232.0 234.1 227.3 91.6 89.2 82.8 86.9 79.5 1H11 2H11 1H12 1H11 2H11 1H12 1H11 FY 2011 1H12 * CIR = Ratio of IFRS operating expenses before amortis
Slide 14: Detailed analysis of headcount & personnel expenses
Detailed analysis of headcount & personnel expenses Underlying private banking and asset management personnel expenses (excl. negative business review impact and EFG FP) are down 10% Breakdown personnel Headcount Average headcount expenses (in CHF m) 2,549 2,547 -7% 2,317 2,357 2,546 2,521 2,318 2,4
Slide 15: AuM development
AuM development Return to positive net new asset generation (CHF bn) CHF 1.24 bn NNA for continuing businesses incl. EFG FP, 0.7 (0.3) (1.3) annualized growth rate of 3.2% 1Q12 in line with target range; (2.3) 1.2 2Q12 impacted by sovereign debt crisis June 2012 showed again better performance 78.4
Slide 16: AuM and NNA by business region
AuM and NNA by business region Solid performance across business regions with particular challenges in Switzerland Jun 2012 AuMs 1H12 NNA continuing CHF 76.5 bn operations CHF (1.2 bn) Continental 31.1 (0.2) Europe Asia 14.0 0.3 Americas 10.9 0.5 UK 15.5 0.5 1.9* 0.1* Asset Management 6.4** 0.5** EF
Slide 17: Life insurance policies portfolios – Update
Life insurance policies portfolios – Update Impact of life insurance portfolio on current financials Portfolio “Held to Maturity”* - Carrying value CHF 688 million (acquisition cost, premium paid, accrued interest); more conservative yield assumptions versus 1H11 (actual yield of 5.5% lowered from 8
Slide 18: Continued strong & liquid balance sheet
Continued strong & liquid balance sheet Strong liquidity with Deposit/Loan Ratio of 190% Total assets: CHF 22.6 bn Total liabilities & equity: CHF 22.6 bn Cash & banks 4.2 Due to banks 1.1 Deposits 15.1 Treasury bills 0.7 Derivatives 0.5 Available 3.9 for sale Financial Designated 0.4 6.3 at incepti
Slide 19: Overview Sovereign and bank exposure
Overview Sovereign and bank exposure GIIPS exposure significantly reduced from CHF 392.1 m to CHF 138.8 m (in CHF m) 30 June 2012 31 December 2011 Bank Bank Country Sovereign Bank bonds placements & Sovereign Bank bonds placements & other other Italy 12.1 - 0.7 11.9 0.1 2.0 Portugal - 25.0 - - 22.0
Slide 20: Capital position
Capital position Evolution of BIS capital position Breakdown of RWAs (in CHF bn) 12.9% 15.1% Total Capital Ratio 6.0 12.8% 14.2% Tier 1 Ratio 5.6 0.6 0.6 15.1% 1.4 XX 1.4 12.9% XX 3.6 4.0 Dec 11 Jun 12 Dec 11 Jun 12 Market / Settlement / Non- counterparty related Evolution of BIS capital ratio Opera
Slide 21: Impact of capital restructuring on capital ratios
Impact of capital restructuring on capital ratios Position post-BdP restructuring & treasury share sale BIS capital ratio (in %) Treasury shares: increased Common Equity by CHF 76 m (+1.3%) 15.1 12.9 Total Capital Ratio BdP exchange: 14.2 - BdP repurchase decreased Tier 1 by CHF 52 m (-0.9%) Tier 1
Slide 22: Current status, outlook
1.0 Introduction 2.0 Performance Current status, 3.0 John Williamson, CEO outlook 22
Slide 23: Process of resetting business complete
Process of resetting business complete Unprofitable / marginal private banking locations addressed Canada Scandinavia Bull Wealth Management - Offices in Helsinki / Denmark closed. being sold, completing - EFG Bank AB in Sweden being wound down. exit from Canadian market. France - Sold EFG Assurance
Slide 24: But still a strong international presence
But still a strong international presence Active in 30 locations, with 15 booking centres Stockholm Birmingham London Luxembourg Jersey, Frankfurt Guernsey Switzerland Liechtenstein New York Los Angeles Monaco Shanghai Miami Key Biscayne Lyford Cay Taipei Spain Nassau Hong Kong Cayman Islands Gibral
Slide 25: Most private banking businesses performing well
Most private banking businesses performing well UK Continental Europe (inc. Switzerland) Good progress, with strong - Luxembourg, Monaco & Spain well on track end to first half. to be more profitable this year than last. - In Switzerland, strong progress reducing costs. But continued industry pressu
Slide 26: Continuing to strengthen management team
Continuing to strengthen management team Continue to strengthen senior management team, with objectives of driving growth and hiring quality CROs: • In Singapore, Tho Gea Hong appointed Deputy CEO and Head of Private Banking for SE Asia. Ex-Merrill Lynch. • In UK, Daniel Gerber joined on 2 July as M
Slide 27: Ongoing emphasis on CRO productivity
Ongoing emphasis on CRO productivity • Total CROs: 503 end-June 2012 (from 567 end-2011). • Total private banking CROs: 440 end-June 2012 (from 508 end-2011 and 531 at time of business review Oct-11). • Private banking CRO reduction of 87 from businesses exited and addressing under-performing CROs,
Slide 28: Solid progress re investment solutions / EFG FP
Solid progress re investment solutions / EFG FP EFGAM • Focus to provide enhanced support to private banking businesses. • Continued to generate strong growth in AuM. EFG Financial Products • Continued to perform strongly, with revenues up 28% vs. a year earlier. • Business continues to invest in gr
Slide 29: Continue to strengthen business foundations
Continue to strengthen business foundations Capital Madoff • BIS Capital Ratio will continue to • Settled, for CHF 7.8 m, class action strengthen as a result of business profits claim of USD 130 m re clients invested and planned IPO of EFG Financial in Fairfield Sentry. Products. • Denied all liabil
Slide 30: Focus now on optimising and growing
Focus now on optimising and growing Resetting 2012-14 Optimising 2013- • Exit underperforming / non- Moving forward core business (complete • Delivering the budget – asap). controlled, profitable growth. • Headcount reductions / • Net business growth. • Continue to challenge all improvements to aspe
Slide 31: Strong building blocks and keeping things simple
Strong building blocks and keeping things simple A new equilibrium, post-resetting + well positioned strategically • More focused; less complex. • More of a private bank than most peers. • A good size. + cost savings from business review • International footprint / diversified geographically. • Lega
Slide 32: Committed to delivering medium-term objectives
Committed to delivering medium-term objectives Business conditions, and various pressures impacting industry, will continue to have a significant bearing on the rate of progress. However, remain committed to medium-term objectives: • Net new assets in the range 5-10% per annum. • Reduced cost-income
Slide 33: Practitioners of the craft of private banking
Practitioners of the craft of private banking www.efginternational.com 33
Slide 34: Appendix
4.0 Appendix 34
Slide 35: Consolidated income statement (IFRS)
Consolidated income statement (IFRS) (in CHF million) 1H 2011 2H 2011 1H 2012 Net interest income 122.6 89.1 116.8 Net banking fee & commission income 242.9 211.0 236.7 Net other income 30.5 67.1 55.6 Operating income 396.0 367.2 409.1 Personnel expenses (227.3) (232.0) (234.1) Other operating expen
Slide 36: Consolidated balance sheet (IFRS)
Consolidated balance sheet (IFRS) (in CHF million) Dec 2011 Jun 2012 Cash and balances with central banks 1,079 1,035 Treasury bills and other eligible bills 824 742 Due from other banks 2,207 3,177 Derivative financial instruments 537 536 Financial instruments 6,264 6,292 Loans and advances to cust
Slide 37: Breakdown of Assets under Management
Breakdown of Assets under Management 30.06.12 By category 31.12.11 30.06.12 (in CHF bn) Cash & Deposits 24.9% 25.3% 19.4 Bonds 18.7% 19.0% 14.5 Equities 23.4% 21.7% 16.6 Structured products 8.8% 8.5% 6.5 Loans 12.8% 13.7% 10.5 Hedge Funds / Funds of HFs 6.4% 6.3% 4.8 Other 5.0% 5.5% 4.2 Total 100.0%
Slide 38: Segmental breakdown – 1H 2012
Segmental breakdown – 1H 2012 Performance summary Continental Asset Asia Americas UK EFG FP (in CHF m) Europe Management* Segment revenues 148.9 50.6 54.3 72.2 39.5 62.1 Segment expenses (137.6) (38.3) (38.7) (50.3) (14.0) (50.5) impairment included Profit before tax 11.3 12.3 15.6 21.9 25.5 11.6 AU
Slide 39: Segmental breakdown – 1H 2011
Segmental breakdown – 1H 2011 Performance summary Continental Asset Asia Americas UK EFG FP (in CHF m) Europe Management* Segment revenues 178.1 53.4 36.6 68.2 28.3 48.3 Segment expenses (149.7) (43.9) (32.6) (49.2) (14.7) (42.2) impairment included Profit before tax 28.3 9.5 4.0 19.0 13.6 6.1 AUMs
Slide 40: EFG FP: A growth story
EFG FP: A growth story Currently issuing 20-40 products per day Number of products issued and outstanding (1) Turnover and AUM – year end (CHFbn) (1) 7'000 2008-2011 12.0 2008-2011 CAGR of 67% 6'468 Turnover CAGR > 100% (issued products) AUM CAGR of 66% 10.4 6'000 10.0 5'120 5'000 7.8 8.0 4'062 6.9
Slide 41: EFG FP: First half 2012 update
EFG FP: First half 2012 update • Now present in 10 locations in Switzerland, Europe and Asia • Operating income of CHF 63.4m in H1 2012 vs. CHF 45.6m in H1 2011 (39% YoY growth) • H1 2012 net profit of CHF 10.4m vs. CHF 4.1m in H1 2011 (154% YoY growth) • ~260 employees, of which ~60 CROs • Numerous
Slide 42: EFG FP: Key figures
EFG FP: Key figures • Additional operating income derived from the funding generated by EFGFP issued products are currently realized by EFGI (1) There are differences between figures on an EFGI and EFG FP basis due to different accounting policies (2) Trading income represents the change in fair val
Slide 43: EFG FP: Additional information
EFG FP: Additional information • EFG FP has a Value at Risk(1) limit of CHF 2.0m and an average daily usage over the last 300 days of CHF 1.3m • Good progress on white-labelling co-operations with third party banks (other than EFG International) and insurance companies, with several agreements signe
Slide 44: Contacts
Contacts Media Investors Strategic Marketing & Communications EFG International Investor Relations Keith Gapp, Head of SMC Jens Brueckner, Head of IR Telephone: +41 44 226 1217 Telephone: +41 44 226 1799 E-mail: keith.gapp@efginternational.com E-mail: jens.brueckner@efginternational.com EFG Internat