Efg International Ag · SIX:EFGN
Efg International — FY2014 Earnings Presentation
44 slides from Efg International's earnings presentation, Feb 25, 2015
Slide 1: Full-year results presentation 2014
Full-year results presentation 2014 Zurich, 25 February 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 – John Williamson, CEO
Introduction John Williamson, CEO Financial performance Current status, outlook 3
Slide 4: Financials summary
Financials summary 2014 vs. 2013 IFRS net profit CHF 61.4 m 45% Pre-provision operating profit CHF 141.6 m 19% Underlying recurring net profit to ordinary shareholders* CHF 130.7 m 18% Operating income CHF 716.6 m 8% Revenue margin 89 bps from 88 bps Net new assets CHF 4.4 bn from CHF 2.5 bn Net new
Slide 5: Highlights of the year
Highlights of the year • Strong improvement in operating income and underlying profit. • Revenue margin robust. • Net new assets within target range. • Reported profit significantly impacted by non-recurring legal and professional charges and provisions – CHF 63.7 m in H1 and CHF 5.9 m in H2. • Stro
Slide 6: Giorgio Pradelli, Deputy CEO & CFO
Introduction Financial performance Giorgio Pradelli, Deputy CEO & CFO Current status, outlook 6
Slide 7: 2014 Highlights (I)
2014 Highlights (I) Revenue-generating AuM up 11% year-on-year. Net new assets comfortably within target range. RoAuM resilient at 89 bps for 2014, improved during 2H14 Revenue-generating AuM Net new assets* RoAuM (in CHF bn) (in CHF bn) (in bps) Other income Commission Net interest + 11% 84.2 +4% +
Slide 8: 2014 Highlights (II)
2014 Highlights (II) Operating leverage kicking-in. Pre-provision profit up 19% year-on-year. Strong performance in 2H 2014, up 14% vs. 1H 2014 Operating income Pre-provision operating profit (in CHF m) (in CHF m) + 8% 716.6 666.0 373.7 + 19% 342.9 141.6 118.8 + 14% 75.4 2013 2014 1H14 2H14 64.2 66.
Slide 9: Underlying recurring net profit vs IFRS profit (I)
Underlying recurring net profit vs IFRS profit (I) 2014 underlying recurring net profits increased by 18%. 2014 IFRS results impacted by non-recurring legal and professional charges and provisions 2014 2013 (in CHF m) (in CHF m) 5.9 130.7 30.0 (0.3) 4.0 111.8 9.3 111.2 33.7 8.0 15.4 (36.4) (0.9) 61.
Slide 10: Underlying recurring net profit vs IFRS profit (II)
Underlying recurring net profit vs IFRS profit (II) Underlying recurring net profit increased by 27% versus 1H 2014 1H14 2H14 (in CHF m) (in CHF m) 5.9 73.1 67.4 30.0 57.6 (0.2) (0.1) 33.7 IFRS BdP Exceptional 2H14 Underlying profit dividend legal and recurring (6.0) for 2H14 professional profit to
Slide 11: Quality of net earnings improved in 2014
Quality of net earnings improved in 2014 Profit contribution from Core Private Banking increased by 22% year-on-year Profit before tax components (in CHF m) Profit contribution from core PB up 62% over last two years 80.3 84.2 Profit contribution from ALM increased 60.7 78.0 despite low-interest
Slide 12: Operating income
Operating income Operating income up 8% versus last year and up 9% versus 1H 2014 Operating income Net interest income Net commissions Net other income (in CHF m) (in CHF m) (in CHF m) (in CHF m) + 8% 716.6 381.3 666.0 343.3 247.2 373.7 213.2 342.9 109.5 88.1 30.5 2013 2014 1H14 2H14 2013 2014 2013
Slide 13: Quality of revenues improved in 2014
Quality of revenues improved in 2014 Core private banking revenues increased by 7% in 2014. 2H 2014 was up 10% year-on-year Operating income components (in CHF m) Operating income from private banking & asset management at highest level since business review 716.6 and up 13% over the last two year
Slide 14: Operating expenses
Operating expenses Progress in reduction of cost-income ratio Operating expenses Cost-income ratio* (in CHF m) (in %) 2H 2014 cost-income ratio stood at 79.3% (78.2% excluding exceptional legal and + 5% professional expenses) 575.0 81.5 547.2 5.9 79.8 Operating expenses up 5% (up 4% excluding 56
Slide 15: Detailed analysis personnel expenses
Detailed analysis personnel expenses Personnel expense growth aligned with growth in pre-provision profit Breakdown personnel expenses Evolution of personnel expenses (fixed & variable) (in CHF m) (in CHF m) Cost variation 418.8 FX impact 2.8 (5.3) 396.2 17.8 11.4 3.5 (4.5) 0.8 214.2 (0.7) 418.8 6.1
Slide 16: Overview of potential FX impact
Overview of potential FX impact Recent FX volatility limited headwind Current situation Comments on potential impact EUR-denominated AuM / revenues approx. 20% of total, EUR-denominated costs approx. 15% of total. EUR/CHF exchange rate Assuming that 2015 EUR/CHF average exchange rate were to remai
Slide 17: Mitigating actions
Mitigating actions Committed to decrease cost-income ratio down to below 75% Redouble efforts to control core operating costs, while still financing growth Hiring freeze remains in place, exceptions are hiring of high quality CROs and regulatory and risk management requirements Review of the n
Slide 18: Growth and productivity drivers
Growth and productivity drivers Strong CRO recruitment pipeline, with remaining CROs becoming more productive Number of CROs AuM per CRO (in CHF m) 409* 425* 444 445 + 39% 456 217 440 435 191 416 179 183 174 156 1H13 2H13 1H14 2H14 2011 2012 2013 excl. CROs 2014 Excl. CROs hired in 2013 hired in 201
Slide 19: New CRO performance
New CRO performance Higher proportion of newly recruited and retained CROs meeting short-term profitability targets Number of New CROs* Approx. 60% of CROs hired in 2013 and retained to 63 date are already profitable 52 58 Approx. 20% of CROs hired in 2014 and retained to 42 date have passed bre
Slide 20: Revenue-generating AuM development
Revenue-generating AuM development Net new asset generation comfortably in target range AuM evolution Pro-forma average AuM evolution (in CHF bn) due to recent FX changes (in CHF bn) 4.4 0.7 84.2 - 1.1% 3.2 80.4 75.9 79.5 Dec 13 FX Market NNA Dec 14 2014 24 Feb 2015* CHF 4.4 bn NNA, growth rate of
Slide 21: AuM and NNA by business region
AuM and NNA by business region Dec 2014 AuMs 2014 NNA: CHF 4.4 bn CHF 84.2 bn as % of RoAuM NNA growth total AuM (in bps) (in %) Switzerland 15.1 18% 108 (1.0) -6% Continental Europe 15.7 19% 80 1.5 11% Asia 17.5 21% 72 1.5 10% Americas 12.7 15% 90 0.5 4% Miami 9.6 0.8 9% UK 19.7 23% 91 1.5 9% EFG A
Slide 22: Capital position (I)
Capital position (I) Continued strong capital position – Basel III fully applied CET1 ratio at 14.2% and BIS total capital ratio at 18.7% BIS total capital ratio Breakdown of RWAs (in %) (in CHF bn) 18.7 18.0 4.2 5.7 5.8 15.9 4.2 0.3 0.3 0.3 0.3 1.3 1.3 12.9 11.7 4.2 0.1 4.1 4.2 13.5 14.2 8.7 11.7 D
Slide 23: Capital position (II)
Capital position (II) Underlying capital generation added 250 bps to capital ratio Evolution of BIS capital ratio (in %) 2.5 0.7 18.7 (0.5) 0.2 18.0 (1.1) (0.7) (0.4) 4.5 4.5 Common Equity (CET1) Additional Tier 1 & Tier 2 14.2 13.5 Dec 2013 Underlying RWA P&L Currency Dividend Pension Others Dec 20
Slide 24: Adoption of a progressive dividend policy commenced
Adoption of a progressive dividend policy commenced Proposed increased dividend from CHF 0.20 to CHF 0.25, DPS increase of 25% over previous year Dividend per share (in CHF) & Payout ratio (in %) Dividend proposal for 2015 2014 IFRS underlying net profit (in CHF m) 130.7 29% 27% Total amount of prop
Slide 25: Balance sheet
Balance sheet Growth of balance sheet driven by increased deposits Total assets: CHF 25.3 bn Total liabilities & equity: CHF 25.3 bn Due to banks 0.5 Loan-deposit ratio at 0.60 Cash & banks 5.0 Adoption of a more cautious approach to lending during 2H Treasury bills 0.6 2014 Available Deposits 1
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 774.2 million (acquisition cost, premium paid, accrued interest); with an effective interest rate of 3.4% Net revenues in 2014 on life portfolios of CHF
Slide 27: John Williamson, CEO
Introduction Financial performance Current status, outlook John Williamson, CEO 27
Slide 28: Most private banking businesses performing strongly
Most private banking businesses performing strongly UK Continental Europe • Pre-provision profit contribution • Pre-provision profit contribution up 13%. up 33%. • NNA growth of 9%. • NNA growth of 11%. Americas Switzerland Asia • Pre-provision profit contribution • Pre-provision profit • Pre-provis
Slide 29: CRO hiring continues to strengthen
CRO hiring continues to strengthen • Number of CROs stood at 440 at end-2014 (435 a year earlier). • Significant improvement in hiring evidenced by HY position of 456 and further 25 hires in H2. • Hiring particularly strong in Asia, Continental Europe, Switzerland. • Offset during H2 by tightening o
Slide 30: Wide range of initiatives reflecting focus on growth
Wide range of initiatives reflecting focus on growth Switzerland CEE • New Regional Business Head for • Hungarian team joining March 2015, based Continental Europe and Switzerland - in Zurich. providing fresh impetus to business. • Team of 3 CROs serving another CEE • Exceptionally strong CRO pipeli
Slide 31: Wide range of initiatives reflecting focus on growth (ii)
Wide range of initiatives reflecting focus on growth (ii) Latin America Investment & Wealth Solutions • Plans to establish onshore business in Chile • Continue to invest in integrated solutions progressing well. Should commence platform – wealth structuring, investments, operations by mid-year. cred
Slide 32: Strong commitment to delivering operating leverage
Strong commitment to delivering operating leverage • Committed to getting cost-income ratio to below 75%. • Central to this: delivering business growth, flowing through with minimal dilution to productivity and profits. • In response to strengthening CHF, will redouble efforts to control core operat
Slide 33: New chairman proposed
New chairman proposed • Joachim H. Straehle to be proposed as new Chairman of the Board of EFG International, s.t. approval at AGM on 24 Apr 2015. • Extremely well qualified to help oversee future development as a leading independent private bank: • Chief Executive Officer of Bank Sarasin & Co from
Slide 34: Summing up
Summing up • General business outlook remains uncertain. • However, a significant and growing market opportunity, and EFG International remains competitively differentiated • We have momentum - improving core business profitability / earnings quality; enhanced CRO productivity; improved business mix
Slide 35: Committed to delivering medium-term objectives
Committed to delivering 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 teens for the Common Equity Ratio (CET 1). • Revenue ma
Slide 36: Practitioners of the craft of private banking
Practitioners of the craft of private banking www.efginternational.com 36
Slide 37: Appendix
Appendix EFG@ International
Slide 38: Consolidated income statement (IFRS)
Consolidated income statement (IFRS) (in CHF million) 2013 2014 Net interest income 213.2 247.2 Net banking fee & commission income 343.3 381.3 Net other income 109.5 88.1 Operating income 666.0 716.6 Personnel expenses (396.2) (418.8) Other operating expenses (135.4) (141.4) Amortisation of tangibl
Slide 39: Consolidated income statement (IFRS)
Consolidated income statement (IFRS) (in CHF million) 1H 2014 2H 2014 Net interest income 126.0 121.2 Net banking fee & commission income 182.3 199.0 Net other income 34.6 53.5 Operating income 342.9 373.7 Personnel expenses (204.6) (214.2) Other operating expenses (64.9) (76.5) Amortisation of tang
Slide 40: Consolidated balance sheet (IFRS)
Consolidated balance sheet (IFRS) (in CHF million) Dec 2013 Dec 2014 Cash and balances with central banks 849 2,855 Treasury bills and other eligible bills 631 626 Due from other banks 2,200 2,109 Derivative financial instruments 560 569 Financial instruments 5,415 5,688 Loans and advances to custom
Slide 41: Breakdown of Assets under Management
Breakdown of Assets under Management 31.12.14 By category 31.12.13 31.12.14 (in CHF bn) Cash & Deposits 26% 26% 21.5 Bonds 20% 20% 16.8 Equities 26% 26% 22.0 Structured products 3% 3% 2.5 Loans 16% 16% 13.1 Hedge Funds / Funds of HFs 4% 4% 3.8 Other 5% 5% 4.5 Total 100% 100% 84.2 31.12.14 By currenc
Slide 42: 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 168.4 120.5 106.8 170.8 116.6 142.3 5.0 (113.8) 716.6 Segment expenses (126.9) (86.9) (79.8) (108.6) (81.7) (5
Slide 43: Segmental analysis – 2013
Segmental analysis – 2013 Investment Performance summary Continental Corporate Switzerland Americas UK Asia and Wealth Eliminations Total (in CHF m) Europe center Solutions Segment revenues 161.0 98.9 98.6 150.1 120.2 95.8 10.9 (69.5) 666.0 Segment expenses (123.6) (73.3) (76.8) (94.7) (82.0) (47.9)
Slide 44: 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