Slide 1: Full year results presentation 2010
Full year results presentation 2010 Zurich, 9 March 2011 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 any securities regarding EFG Int
Slide 3: Introduction
1.0 Introduction Lonnie Howell, CEO 2.0 Performance Current status, 3.0 outlook 3
Slide 4: A year of consolidation with continued strong NNA
A year of consolidation with continued strong NNA vs. 2009 Core net profit* CHF 172.0 m 10% Net new assets from private CHF 11.0 bn 26% clients Revenue-generating AUM CHF 84.8 bn 2% CROs 675 4% Net loss attributable to CHF 768.7 m - Group shareholders** BIS tier 1/ total capital ratio 13.9% / 14.0%
Slide 5: Challenging environment but core business robust
Challenging environment but core business robust • On the back of EU sovereign / PIIGS crisis muted client activity for much of 2010. • However, improvement during the latter part of year. • Exceptional strength of Swiss franc a drag on performance • AUM: CHF -10.1 bn • Core operating income: CHF -3
Slide 6: Core private banking business robust and growing
Core private banking business robust and growing • Strong private client NNA growth at 13%, and 26% up on 2009. • CROs with EFGI for more than a year are profitable. • Strong performances from most private banking businesses. • Loyal clients and CROs despite challenging year for EFGI. • Quality hiri
Slide 7: Performance
1.0 Introduction 2.0 Performance Jean-Christophe Pernollet, CFO Current status, 3.0 outlook 7
Slide 8: Key performance indicators
Key performance indicators A year of consolidation and strong net new assets Average revenue- generating AUM Private client net new RoAUM Core operating income Core net profit (in CHF bn) assets (in CHF bn) (in bps) (in CHF m) (in CHF m) 85.9 859.1 MBAM revenues 808.1 11.0 51.6 12.1 80.5 107 191.8 8
Slide 9: EFG International 5 years since IPO
EFG International 5 years since IPO AUM development Oct 2005 – 2010: Actual year-end AUMs vs. constant currency AUMs (10/2005 base) (in CHF bn) 112.0 102.4 89.7 87.3 82.9 89.5 86.2 85.984.8 80.5 75.4 65.8 65.2 IPO EFGI 43.7 43.3 36.3 10/2005 12/2005 12/2006 12/2007 12/2008 12/2009 12/2010 Note: Year
Slide 10: Return on AUM
Return on AUM An improvement in the second half of the year Return on AUM (in bps) 118 112 107 107 107 107 +3 bps 16 94 12 95 7 92 64 62 58 32 33 29 1H08 2H08 1H09 2H09 1H10 2H10 2008 2009 2010 Interest Commission Other income • 29 bps interest income reflecting low interest rate environment – low r
Slide 11: Core income statement
Core income statement (in CHF m) 2009 2010 Core operating income 859.1 808.1 Core operating expenses (653.4) (662.1) Asset impairments (5.4) (0.1) Taxes (5.4) 27.7 Minorities (3.1) (1.6) Core net profit 191.8 172.0 For detailed reconciliation to IFRS see slide 32. 11
Slide 12: Core operating income
Core operating income Resilience in front of low client activity and currency impacts Core net interest Core net commissions Core other income (in CHF m) (in CHF m) (in CHF m) -0.3% 497.6 496.3 MBAM 12.1 -5% 51.6 revenues -38% 484.2 263.3 446.0 250.5 98.2 61.3 2009 2010 2009 2010 2009 2010 • Decreas
Slide 13: Operating expenses
Operating expenses Mainly driven by investment in people and infrastructure, with some one-off items Personnel expenses (in CHF m) Other operating expenses (in CHF m) Cost-income ratio* (in %) +1.0% +2.6% 85.2 473.9 214.8 79.0 469.0306.3 209.4 306.3 Total expenses +1.5% 2009 2010 2009 2010 2009 2010
Slide 14: AuM development
AuM development Again, strong NNA and currency impacts (CHF bn) • Private client growth rate in net new assets of 13% • Total net new assets for the year were CHF 9.7 bn Total NNA Private Clients: CHF 11.0 bn (10.1) 0.5* 0.7 10.3 (2.8) 86.2 84.8 Dec 09 FX Market HF re- Client loans NNA Dec 10 dempti
Slide 15: Continued strong & liquid balance sheet
Continued strong & liquid balance sheet Total liabilities & Total assets: CHF 20.9 bn equity: CHF 20.9 bn Generally AA rated banks Due to banks 0.3 Cash & banks 2.9 Deposits 14.9 Sovereign / AAA Treasury bills 2.0 Derivatives 0.4 Available 3.7 for sale - Sovereign; - EU Quasi-Sovereign AAA/AA; Finan
Slide 16: Strong funding position
Strong funding position (in CHF m) Dec 31, 2009 Dec 31, 2010 Due to clients 15,728 14,905 Structured product issuances 1,002 2,863 Gross funding from clients 16,730 17,768 Loans and advances to clients (8,218) (8,958) Net excess funding from clients 8,512 8,810 Deposit/Loan Ratio 198% 16
Slide 17: Comfortable capital position
Comfortable capital position Evolution of BIS capital position Breakdown of RWAs (in CHF bn) 13.7% 13.0% 14.0% Total Capital Ratio 5.8 5.5 13.6% 12.9% 13.9% Tier 1 Ratio 0.4 0.5 XX 1.6 1.4 13.7% 14.0% 13.0% XX 3.8 3.6 Dec 09 Dec 10 Market / Settlement / Non- Dec 09 Jun 10 Dec 10 counterparty related
Slide 18: Current status, outlook
1.0 Introduction 2.0 Performance Current status, 3.0 Lonnie Howell, CEO outlook 18
Slide 19: Business foundations remain strong
Business foundations remain strong • Focus on private banking. • Loyal clients – strong double digit NNA. • Continued appeal to high quality private bankers. • A flexible, entrepreneurial business model. • Well capitalised and a high quality, liquid balance sheet. • International diversification – 5
Slide 20: A track record of strong NNA growth
A track record of strong NNA growth Strong and consistent record in private client NNA Growth in net new assets (%) 22% 19% 17% 13% 11% 2006 2007 2008 2009 2010 Growth maintained during 2010 - at 13%, maintaining track record of one of highest growth rates in sector. 20
Slide 21: Good performances from most PB businesses
Good performances from most PB businesses UK – strong double digit Continental Europe – Luxembourg growth in revenues & exceptionally strong NNA and AUM Copenhagen growth. Both France and Spain AUM. Private banking revenues up over 20%. delivered growth and maintained track record of strong investme
Slide 22: Proposed management structure - business unit reorganisation
Proposed management structure - business unit reorganisation EFGI Executive Committee Europe ex. UK UK Americas Asia EFG AM Asset Management Four regional Private Banking + Business Businesses • Each unit led by entrepreneurial Business Unit Head with delegated authorities and full responsibility &
Slide 23: Strong focus on growing AUMs and revenues
Strong focus on growing AUMs and revenues • Continued strong double digit NNA generation. • Average AUM per CRO around half the industry norm of CHF 200-250m (due to shorter CRO tenure at EFGI) - plenty of upside. • Selective CRO hiring and extension of representation. • Increasing revenue margin. •
Slide 24: Continued development at EFG AM
Continued development at EFG AM • EFG AM established as global platform. • Full range of managed accounts, funds, and advisory services. • Good progress in supporting CROs. • Discretionary portfolio management business increased by 20%. • Appointed head of Asia (Jan 11) – developing in Hong Kong and
Slide 25: EFG FP performing strongly
EFG FP performing strongly • Strong 2010 performance; revenues up 31%. • Business profitable since break-even in autumn 2008 (1 year after foundation). • Top 3 issuer in listed investment products in Switzerland. • ~2’250 products outstanding; number of primary issues up by 82% y-o-y. • Opened offic
Slide 26: Continued ability to attract CROs
Continued ability to attract CROs • Number of CROs stood at 675, up from 650 at end-2009. • Focus firmly on attracting high quality CROs and teams. • CROs with EFGI for more than a year are profitable. • Strong results from new teams. Outlook • Healthy pipeline. • Envisage net recruitment being high
Slide 27: Outlook
Outlook Targets for next two to three years (based on prevailing economic and market conditions) Strategic targets for next 2010 two to three years Annual net CRO hiring of CROs 675 25 - 50 Net new private client 13% p.a. Double-digit annual growth assets growth Revenue margin 94 bps 100 bps To impr
Slide 28: Practitioners of the craft of private banking
Practitioners of the craft of private banking www.efginternational.com 28
Slide 29: Appendix
4.0 Appendix 29
Slide 30: Consolidated income statement (IFRS; audited)
Consolidated income statement (IFRS; audited) (in CHF million) 2009 2010 Net interest income 263.3 250.5 Net banking fee & commission income 497.6 496.3 Net other (loss) / income* 98.2 (421.3) Operating income 859.1 325.5 Personnel expenses (469.0) (473.9) Other operating expenses (187.2) (192.9) Am
Slide 31: Consolidated income statement (IFRS)
Consolidated income statement (IFRS) (in CHF million) 1H 2008 2H 2008 1H 2009 2H 2009 1H 2010 2H 2010 Net interest income 127.3 159.3 153.8 109.5 127.0 123.5 Net banking fee & commission income 306.3 265.4 204.3 293.3 249.3 247.0 Net other income/(loss) 94.0 (6.0) 54.0 44.2 (468.6) 47.3 Operating in
Slide 32: Reconciliation IFRS to core profit
Reconciliation IFRS to core profit Impairment Core Core profit (in CHF million) 2010 IFRS Adjustments Adjustments 2010 Net interest income 250.5 250.5 Net banking fee & commission income 496.3 496.3 Net other income (421.3) (482.6) 61.3 Operating income 325.5 (482.6) 808.1 Operating expenses (688.7)
Slide 33: Consolidated balance sheet (IFRS; audited)
Consolidated balance sheet (IFRS; audited) (in CHF million) Dec 2009 Dec 2010 Cash and balances with central banks 265 712 Treasury bills and other eligible bills 771 2,038 Due from other banks 3,520 2,227 Derivative financial instruments 286 354 Financial instruments 5,835 5,710 Loans and advances
Slide 34: Regional breakdown of Assets under Management
Regional breakdown of Assets under Management Changes by region By region 31.12.09 31.12.10 As % of total (CHF bn) Switzerland 22.4 18.6 22% Switzerland - 3.8 Asia 11.4 14.2 17% Asia 2.8 Americas 13.1 12.8 15% Americas - 0.3 UK & Channel Islands 12.5 11.0 13% UK & Channel Islands - 1.5 Rest of Europ
Slide 35: Breakdown of Assets under Management
Breakdown of Assets under Management 31.12.10 By category 31.12.09 31.12.10 (in CHF bn) Cash & Deposits 25.3% 23.3% 19.7 Bonds 17.2% 17.4% 14.7 Equities 26.6% 27.1% 22.9 Structured products 8.9% 9.3% 7.8 Loans 9.5% 11.0% 9.3 Hedge Funds / Funds of HFs 10.1% 8.3% 7.1 Other 2.4% 3.6% 3.3 Total 100.0%
Slide 36: Details on goodwill & intangibles position as of Dec 2010
Details on goodwill & intangibles position as of Dec 2010 (in CHF m) 31 Dec 2009 Action 31 Dec 2010 Specialist Product Businesses Goodwill / Asset Total Goodwill & Intangible assets Goodwill Total Write-down intangible assets MBAM 224.4 259.0 483.4 467.4 16.0* CMA 11.1 188.9 200.0 Fully 0.0 DSAM 10.
Slide 37: Life insurance policies portfolio: Overview
Life insurance policies portfolio: Overview* • Diversified portfolio of 264 life insurance policies issued by US life insurance companies • 67% males and 33% females • Average age of lives insured: 82.4 years • Average life expectation: 7.6 years, i.e. 90 years • Total death benefits ~USD 1’800 m; b
Slide 38: Background information to tax items
Background information to tax items Tax credit of CHF 27.7 million reflects one-off benefits relating to: • Reversal of historically booked tax provisions: CHF 15.0 million • Deferred tax assets partially relating to 2010 write-downs: CHF 12.0 million Consolidated mid-term tax rate expected to be in
Slide 39: Basel III impact
Basel III impact • BIS Total Capital ratio at December 2010 of 14.0%, BIS Tier 1 ratio at 13.9% • Strategic target BIS Tier 1 ratio minimum 16% by end of 2012 • No issue anticipated regarding compliance from 1 January 2013 onwards with “Minimum Tier 1 Capital” and “Minimum Total Capital” ratios, irr
Slide 40: Segmental breakdown
Segmental breakdown Private Banking and Wealth Management Asset Management Corporate center Rest of Asset Management Divisions of Swiss and UK Swiss Asia Americas UK banks Europe EFG Financial Products Marble Bar Asset Management (until 30 April 2010) Switzerland Hong Kong USA & Canada France UK & L
Slide 41: Segmental breakdown – 2010
Segmental breakdown – 2010 Performance Rest of Asset Swiss Asia Americas UK summary (in CHF m) Europe Management Segment revenues 234.5 100.0 71.6 118.0 145.6 143.3 Segment expenses* (137.7) (76.4) (68.7) (90.4) (135.3) (103.5) Profit before tax 88.2 22.2 1.4 25.3 7.0 35.4 Core net profit 94.7 18.5
Slide 42: Segmental breakdown – 2009
Segmental breakdown – 2009 Performance Rest of Asset Swiss Asia Americas** UK summary Europe Management Segment revenues 283.8 85.8 57.0 131.0 139.6 167.0 Segment expenses* (150.7) (64.6) (55.4) (86.5) (133.3) (112.0) Profit before tax 119.8 17.3 0.1 44.2 2.6 50.6 Core net profit 111.1 14.6 2.7 36.6
Slide 43: Segmental breakdown – 1H 2010
Segmental breakdown – 1H 2010 Performance Rest of Asset Swiss Asia Americas UK summary (in CHF m) Europe Management Segment revenues 120.0 46.3 37.5 61.9 75.7 67.5 Segment expenses* (65.2) (36.6) (34.9) (46.3) (66.5) (46.3) Profit before tax 54.8 9.2 1.8 14.6 7.5 19.1 Core net profit 50.0 7.8 2.0 11
Slide 44: Segmental breakdown – 2H 2010
Segmental breakdown – 2H 2010 Performance Rest of Asset Swiss Asia Americas UK summary (in CHF m) Europe Management Segment revenues 114.5 53.7 34.1 56.1 69.9 75.8 Segment expenses (72.5) (39.8) (33.8) (44.1) (68.8) (57.2) Profit before tax 33.4 13.0 (0.4) 10.7 (0.5) 16.3 Core net profit 44.7 10.7 (
Slide 45: 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@efggroup.com • E-mail: jens.brueckner@efggroup.com EFG Internationa