Efg International Ag · SIX:EFGN
Efg International — H1 2015 Earnings Presentation
40 slides from Efg International's earnings presentation, Jul 29, 2015
Slide 1: Half-year results presentation 2015
Half-year results presentation 2015 Zurich, 29 July 2015 Practitioners of the craft of private banking 1
Slide 2: Legal Disclaimer
Legal Disclaimer This presentation has been prepared by EFG International AG solely for personal use and 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
Slide 3: Introduction – Joachim H. Straehle, CEO
Introduction Joachim H. Straehle, CEO Financial performance Current status, outlook 3
Slide 4: Setting the scene
Setting the scene • Joachim H. Straehle took over from John Williamson on 24 April 2015 as CEO of EFG International. Rationale: to introduce a fresh perspective, while preserving an important element of continuity. • Inherited a business where resetting aspects of the Business Review completed and a
Slide 5: Financial performance – Giorgio Pradelli, Deputy CEO & CFO
Introduction Financial performance Giorgio Pradelli, Deputy CEO & CFO Current status, outlook 5
Slide 6: Financials summary
Financials summary vs. 1H 14 vs. 2H 14 IFRS net profit CHF 48.0 m from CHF (6.0 m) from CHF 67.4 m Pre-provision operating profit CHF 57.0 m from CHF 66.2 m from CHF 75.4 m Underlying recurring net profit* CHF 51.0 m from CHF 57.7 m from CHF 73.3 m Operating income CHF 353.0 m from CHF 342.9 m from
Slide 7: 1H 2015 Highlights (I)
1H 2015 Highlights (I) RoAuM resilient at 87 bps for 1H 2015; NNA reflect decision to exit certain non- strategic lending business Revenue-generating AuM Average revenue-generating Net new assets RoAuM (in CHF bn) AuM (in CHF bn) (in CHF bn) (in bps) Other income FX impact FX impact Commission Net i
Slide 8: 1H 2015 Highlights (II)
1H 2015 Highlights (II) Pre-provision profit below expecations; revenue decline driven by decision to exit certain non-strategic lending business and negative FX impact of less than 3% Operating income (in CHF m) Pre-provision operating profit FX impact (in CHF m) 373.7 FX impact 10.6 353.0 342.9 36
Slide 9: Underlying recurring net profit vs IFRS profit
Underlying recurring net profit vs IFRS profit 1H 2015 underlying recurring net profit declined by 12% versus 1H 2014; reflects decision to exit certain non-strategic lending business and a weaker 2Q15 1H15 1H14 (in CHF m) (in CHF m) No incremental US tax related costs in 1H15 Consider that prev
Slide 10: Operating income (I)
Operating income (I) Operating income up 3% year-on-year, down 3% vs 2H14 (adjusted for FX) Operating income Net interest income Net commissions Net other income (in CHF m) (in CHF m) (in CHF m) (in CHF m) FX impact FX impact FX impact FX impact 373.7 199.0 10.6 5.7 190.5 353.0 182.3 342.9 363.2 193
Slide 11: Operating income (II)
Operating income (II) Core private banking revenues increased by 2% year-on-year Operating income components (in CHF m) Core private banking revenues down 5% vs. 2H14 ALM revenues skewed to 1Q15 Operating income in 2H14 and 1Q15 benefitted from ALM revenues 373.7 Continued decline in contrib
Slide 12: Operating expenses
Operating expenses Operating expenses up 7% y-o-y (up 6% excl. exceptional legal and professional charges), reflecting investments in growth; down -1% versus 2H14 Operating expenses Cost-income ratio* (in CHF m) (in %) 1H15 cost-income ratio excl. exceptional legal FX impact and professional expen
Slide 13: Detailed analysis personnel expenses
Detailed analysis personnel expenses Personnel expense growth reflects investments in new CROs and in Investment & Wealth Solutions Breakdown personnel expenses (in CHF m) 216.8 Level of fixed compensation for continuing business (excl. 214.2 EFG AM) was flat year-on-year at CHF 131.4 m 14.3 204.6
Slide 14: Overview of FX impact
Overview of FX impact Pre-provision profit impact approx. 5% Average FX rates 1H14 1H15 USD/CHF 0.891 0.947 EUR/CHF 1.221 1.057 GBP/CHF 1.487 1.443 Source: Interim reports for 2014 and 2015 Impact on USD EUR GBP Other Total impact (in CHF m) Operating income 11.4 (9.0) (1.7) 1.5 2.2 Operating expens
Slide 15: Growth and productivity drivers
Growth and productivity drivers Strong recruitment pipeline, 24 CROs already contracted to join Number of CROs AuM per CRO (in CHF m) + 26% 425* 444 445 438 456 435 440 444 196 191 179 181 174 156 2H13 1H14 2H14 1H15 2011 2012 2013 2014 1H15 Excl. CROs hired in 1H15 * CROs continuing businesses only
Slide 16: New CRO performance
New CRO performance Retained new CROs becoming profitable ahead of short-term profitability targets Number of New CROs Almost all CROs hired in 2013 and retained to date are profitable and therefore ahead of profitability target 74 47 67 64 Close to 60% of CROs hired in 2014 and 36 retained to d
Slide 17: Revenue-generating AuM development
Revenue-generating AuM development NNA reflect decision to exit certain non-strategic lending business AuM evolution (in CHF bn) Currency movements decreased AuMs by approx. 6% 1.6 Positive market effects increased AuMs by 84.2 approx. 2% (0.3) 80.2 (5.3) Dec 14 FX Market NNA Jun 15 17
Slide 18: AuM and NNA by business region
AuM and NNA by business region Two regions on target, no longer outflows in Switzerland, Asia and Americas impacted by decision to exit certain non-strategic lending business and EM volatility June 2015 AuMs as % of RoAuM 1H15 NNA: CHF (0.3 bn) NNA growth CHF 80.2 bn total AuM (in bps) (in %) Switze
Slide 19: Capital position (I)
Capital position (I) Continued strong capital position, Basel III full applied CET1 ratio at 13.9%*; higher RWAs due to regulatory changes BIS total capital ratio Breakdown of RWAs (in %) (in CHF bn) Leverage ratio (FINMA) at 3.5% vs. 3.4% at year-end 2014 18.7 18.0 17.8* Total leverage ratio at
Slide 20: Capital position (II)
Capital position (II) Underlying capital generation added 90 bps to capital ratio in 1H15 Evolution of BIS capital ratio (in %) 0.9 18.7 0.2 17.8 4.5 (0.7) (1.1) (0.2) 3.9 Common Equity (CET1) Additional Tier 1 & Tier 2 14.2 13.9 Dec 2014 Underlying RWA Currency Pension Others Jun 2015 Basel III P&L
Slide 21: Balance sheet
Balance sheet Balance sheet reduction reflects decrease in loans Total assets: CHF 24.7 bn Total liabilities & equity: CHF 24.7 bn Due to banks 0.6 Loan-deposit ratio at 0.56 Cash & banks 5.7 Liquidity coverage ratio (LCR) at 325% Treasury bills 0.7 Available 18.2 Net stable funding ratio Deri
Slide 22: Life insurance policies portfolios
Life insurance policies portfolios Impact of life insurance portfolio on current financials No maturities in 1H 2015 (vs 9 maturities equivalent to USD 56.7 m in 1H 2014) Net revenues in 1H 2015 on life portfolios of CHF 6.9 million (1H 2014: CHF 10.9 m and 2H 2014: CHF 11.9 m) Portfolio “Held
Slide 23: Current status, outlook – Joachim H. Straehle, CEO
Introduction Financial performance Current status, outlook Joachim H. Straehle, CEO 23
Slide 24: A pure-play private bank
A pure-play private bank EFG is – and will remain – a pure-play private bank. Committed to being a leading independent player. Combining a relationship-driven approach with a full range of services. Based on entrepreneurial CROs and highly satisfied private clients. Delivering shareholder value thro
Slide 25: Strategic priorities
Strategic priorities Grow AuM and Top line Adjust Adjust and develop and develop Grow AuM and Management and and management revenue. Performance cultureculture. performance Strategic thrust Reduce costs. Sharpen strategic positioning. Improve operational efficiency. Sharpen market focus and offering
Slide 26: Action on costs and complexity
Action on costs and complexity • Attaining a C:I ratio of no more than 75% an overriding business priority. • Draw a line under outstanding issues – notably settlement of US tax programme. • Need to reduce costs in light of H1 performance and deliver operating leverage going forward: • Other than hi
Slide 27: Growth must be delivered…
Growth must be delivered… Delivering growth from existing businesses and new growth initiatives - execution a key focus of leadership. Existing CROs Broaden and deepen relations with clients • Return to situation when all CROs deliver • Important to capitalise on investments in meaningful contributi
Slide 28: Growth must be delivered…
Growth must be delivered… Apart from UK, other businesses did not build on 2014 performance. Have to do better. No shortage of activity. Continental Europe UK • In H1, generated NNA within target range. • In H1, generated NNA within • As they did last year, particularly strong performance target ran
Slide 29: Enhancing executive governance
Enhancing executive governance • ExCo / GBC combined into Management Board Aug-2015. • Will include regional business heads not formerly members of ExCo. • To ensure more collective and performance- orientated approach. 29
Slide 30: Committed to delivering medium-term objectives
Committed to delivering medium-term objectives EFG International reaffirms its medium-term objectives • Net new assets in the range 5-10% per annum. • A reduced cost-income ratio - to below 75%. • Maintain capital strength, with an objective of high teens for the Basel III BIS Capital Ratio and low
Slide 31: Should be among leading PBs for AuM and profit growth
Should be among leading PBs for AuM and profit growth • EFG a well-placed business capable of delivering strong double-digit growth over the long term. • Keen to get to CHF 100 billion in AuM asap. • But strengths only meaningful if converted into results - not case in H1. • Confident H1 not an accu
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) 1H 2014 2H 2014 1H 2015 Net interest income 126.0 121.2 100.2 Net banking fee & commission income 182.3 199.0 190.5 Net other income 34.6 53.5 62.3 Operating income 342.9 373.7 353.0 Personnel expenses (204.6) (214.2) (216.8) Other operating expe
Slide 35: Consolidated balance sheet (IFRS)
Consolidated balance sheet (IFRS) (in CHF million) Dec 2014 Jun 2015 Cash and balances with central banks 2,855 3,273 Treasury bills and other eligible bills 626 685 Due from other banks 2,109 2,450 Derivative financial instruments 569 461 Financial instruments 5,688 5,426 Loans and advances to cust
Slide 36: Breakdown of Assets under Management
Breakdown of Assets under Management 30.06.15 By category 31.12.14 30.06.15 (in CHF bn) Cash & Deposits 26% 26% 21.0 Bonds 20% 20% 15.6 Equities 26% 27% 21.8 Structured products 3% 3% 2.3 Loans 16% 15% 11.9 Hedge Funds / Funds of HFs 4% 4% 3.4 Other 5% 5% 4.2 Total 100% 100% 80.2 30.06.15 By currenc
Slide 37: 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 (58.3) (42.4) (41.5) (55.6) (44.6) (31.3)
Slide 38: Segmental analysis – 1H 2014
Segmental analysis – 1H 2014 Investment Performance summary Continental Corporate Switzerland Americas UK Asia and Wealth Eliminations Total (in CHF m) Europe center Solutions Segment revenues 82.9 60.1 52.3 81.0 52.2 63.6 1.4 (50.6) 342.9 Segment expenses (64.7) (41.8) (39.2) (50.1) (35.0) (29.7) (
Slide 39: Segmental analysis – 2H 2014
Segmental analysis – 2H 2014 Investment Performance summary Continental Corporate Switzerland Americas UK Asia and Wealth Eliminations Total (in CHF m) Europe center Solutions Segment revenues 85.5 60.4 54.5 89.8 64.4 78.7 3.6 (63.2) 373.7 Segment expenses (62.2) (45.1) (40.6) (58.5) (46.7) (29.9) (
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