Efg International Ag · SIX:EFGN
Efg International — H1 2010 Earnings Presentation
39 slides from Efg International's earnings presentation, Jul 28, 2010
Slide 1: Half year results presentation 2010
Half year results presentation 2010 Zurich, 28 July 2010 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: Disappointing H1 performance, but NNA strong
Disappointing H1 performance, but NNA strong vs. 1H 09 Core net profit* CHF 88.4 m +17% Net new assets from private CHF 6.3 bn +16% annualised clients Revenue-generating AUM CHF 87.5 bn +9% / +13%** CROs 665 -1% Impairment charges CHF -859.5 m - Net loss attributable to Group CHF -799.2 m - sharehol
Slide 5: Challenging environment impacted profitability
Challenging environment impacted profitability • Gradual improvement in 1Q but weakness in 2Q. • Concerns over sovereign debt and the euro; uncertainty over world economic prospects. • Business performance held back by strong Swiss franc; low interest rates; clients’ preference for cash; lower activ
Slide 6: Core private banking business robust
Core private banking business robust • Loyal clients. • Continued strong private client NNA at 16% annualised • Strong performances from most private banking businesses. • Continued selective approach to CRO hiring and extending representation. 6
Slide 7: Impairment charge re certain specialist product businesses
Impairment charge re certain specialist product businesses • Impairment charge relating to underperforming institutional orientated specialist product businesses MBAM, CMA and DSAM of CHF 860 million. • No impact on regulatory capital or cash-flow. Should not obscure underlying strength of core priv
Slide 8: Performance
1.0 Introduction 2.0 Performance Rudy van den Steen, CFO Current status, 3.0 outlook 8
Slide 9: Key performance indicators
Key performance indicators Average revenue- generating AUM Private client net new Core operating income RoAUM Core net profit (in CHF bn) assets (in CHF bn) (in CHF m) (in bps) (in CHF m) 88.9 88.4 412.1 407.1 77.2 6.3 107 75.7 99* 4.7 92 1H09 1H10 1H09 1H10 1H09 1H10 1H09 1H10 1H09 1H10 * Excluding
Slide 10: Core income statement
Core income statement (in CHF m) 1H 2009 1H 2010 Core operating income 412.1 407.1 Core operating expenses (320.2) (321.0) Loan impairment (4.1) 4.4 Taxes (6.6) 0.0 Minorities (5.5) (2.1) Core net profit 75.7 88.4 EFG International announced in March 2010 that going forward it would report core net
Slide 11: Core operating income
Core operating income Core net interest Core net commissions Core other income (in m) (in m) (in m) -17% 22% -43% 306.3 306.3 153.8 54.0 249.3 127.0 204.3 30.8 1H09 1H10 1H09 1H10 1H09 1H10 • Decline of CHF 26.8 m vs. 1H09 • Average revenue-generating AUM • Client FX revenues of approx. increased by
Slide 12: Operating expenses
Operating expenses Personnel expenses (in CHF m) Other operating expenses (in CHF m) Cost-income ratio* (in %) 4% -1% 92.2 80.6 81.5 306.3 232.2 306.3 89.1 228.8 1H09 1H10 1H09 1H10 1H09 1H10 * CIR = Ratio of operating expenses before • Decrease from 2009 savings initiatives • Effect from new invest
Slide 13: Return on AUM
Return on AUM Return on AUM Average AUM development (in bps) (in CHF bn) 15% 123 89.6 89.4 88.9 118 81.2 83.8 77.2 72.5 115 107 107 107 99 92 1H07 2H07 1H08 2H08 1H09 2H09 1H10 1H07 2H07 1H08 2H08 1H09 2H09 1H10 • RoAUM negatively impacted by: • Average revenue-generating AUM up 15% y-o-y - Low inte
Slide 14: AuM development
AuM development (CHF bn) • Annualised private client growth rate in net new assets strong at 16% (15% excl. loans) • Negative market performance and Total NNA Private Clients: CHF 6.3 bn foreign currency exchange rate resulted in net AUM decline of (0.7) CHF 2.2 bn, primarily driven by 5.5* (1.5) de
Slide 15: Development of amortisation & asset write down
Development of amortisation & asset write down (CHF m) Ordinary amortisation of acquisition related intangibles (not goodwill) Accelerated amortisation of acquisition related intangibles (CMA) Write-down of financial asset in MBAM Deferred tax asset on MBAM write-down 378.7 Loss on disposal/deconsol
Slide 16: Balance sheet highlights
Balance sheet highlights (in CHF m) Dec 31, 2009 June 30, 2010 Gross funding from clients 16,730 17,702 Due to clients 15,728 15,962 Structured product issuances 1,002 1,740 Loans and advances to clients (8,218) (8,937) Net funding from clients 8,512 8,765 Deposit/Loan Ratio 198% (in CHF m) Dec 31,
Slide 17: Continued strong & liquid balance sheet
Continued strong & liquid balance sheet Total liabilities & Total assets: CHF 21.5 bn equity: CHF 21.5 bn Generally AA rated banks Due to banks 0.7 Cash & banks 3.7 Deposits 16.0 Sovereign / AAA Treasury bills 1.4 Derivatives 0.4 Available 4.2 for sale - Sovereign; - EU Quasi-Sovereign AAA/AA; Finan
Slide 18: Capital developments
Capital developments Evolution of BIS capital position Breakdown of RWAs (in CHF bn) 13.7% 13.0% Total Capital Ratio 13.6% 12.9% Tier 1 Ratio 6.0 5.8 13.7% 0.4 0.5 13.0% XX 1.6 1.4 XX 3.8 4.1 Dec 09 June 10 Dec 09 June 10 Market / Settlement / Non- Evolution of BIS capital ratio counter party relate
Slide 19: Current status, outlook
1.0 Introduction 2.0 Performance Current status, 3.0 Lonnie Howell, CEO outlook 19
Slide 20: A solid private banking platform
A solid private banking platform • Clear focus on private banking. • Loyal clients. • A flexible, entrepreneurial business model. • Well capitalised and a high quality, liquid balance sheet. • Geographical diversity – in over 50 locations in 30 countries. • Profitable mix of onshore and offshore ban
Slide 21: 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% 16% 11% 2006 2007 2008 2009 1H 2010 annualised Growth maintained during 1H 2010 at 16% annualised, one of highest growth rates in sector. 21
Slide 22: Good performance from most PB businesses
Good performance from most PB businesses Canada – streamlining of Luxembourg – exceptionally business, but still delivered strong double digit NNA & AUM AUM and revenue growth of growth. over 20%. France – continued steady Americas – AUM growth of progress. Flagship fund over 20%. Strong client (EFG
Slide 23: Continued ability to attract CROs
Continued ability to attract CROs • Number of CROs stood at 665, up slightly from 650 at end-2009. 650 665 • Underlying hiring in keeping with policy of focusing selectively on high quality CROs and teams. • Strong pipeline (notably in Asia). Dec 09 Jun 10 23
Slide 24: Selective extension of international presence
Selective extension of international presence Entered number of new markets and extended presence. All new offices made encouraging starts in terms of business development US – extended presence with office Denmark - new business in Key Biscayne, established in Copenhagen. Florida. China - opened Re
Slide 25: Enhanced support for CROs, and EFG FP growing
Enhanced support for CROs, and EFG FP growing • Continue to develop asset management activities on basis integral to private banking. • Good progress in providing more coordinated • Continued to progress solidly in support, number of practical tools introduced. H1 2010. • Expect % of clients’ assets
Slide 26: Management changes
Management changes • After 10 years Rudy van den Steen has asked to step down as CFO as of 1 October 2010. Will continue to work on matters of strategic significance. • Jean-Christophe Pernollet appointed as new CFO and member of Executive Committee as of 1 October 2010. • Henric Immink: General Leg
Slide 27: Outlook
Outlook Targets for next three years (based on prevailing economic and market conditions) 1H 2010 Status Strategic targets for next three years CROs 665 Annual net CRO hiring of 25 - 50 Net new private client assets 16% p.a. Double-digit annual growth growth Revenue margin 92 bps 100 bps Cost-income
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; unaudited)
Consolidated income statement (IFRS; unaudited) (in CHF million) 1H 2008 2H 2008 1H 2009 2H 2009 1H 2010 Net interest income 127.3 159.3 153.8 109.5 127.0 Net banking fee & commission income 306.3 265.4 204.3 293.3 249.3 Net other income/(loss) 94.0 (6.0) 54.0 44.2 (468.6) Operating income/(loss) 52
Slide 31: Reconciliation IFRS to core profit (unaudited)
Reconciliation IFRS to core profit (unaudited) Core Impairment Core (in CHF million) 1H10 IFRS profit* Adjustments Adjustments 1H10 Net interest income 127.0 127.0 Net banking fee & commission income 249.3 249.3 Net other income (468.6) 499.4 30.8 Operating income (92.3) 499.4 407.1 Impairment rever
Slide 32: Consolidated balance sheet (IFRS; unaudited)
Consolidated balance sheet (IFRS; unaudited) (in CHF million) Dec 2009 June 2010 Change Cash and balances with central banks 265 837 216% Treasury bills and other eligible bills 771 1,362 77% Due from other banks 3,520 2,881 -18% Derivative financial instruments 286 388 36% Financial instruments 5,8
Slide 33: Regional breakdown of Assets under Management
Regional breakdown of Assets under Management Changes by region By region 31.12.09 30.06.10 As % of total (CHF bn) Switzerland 22.4 20.9 24% Asia 11.4 12.4 14% Switzerland -1.5 Americas 15.1 16.1 18% Asia 1.0 UK & Channel Islands 12.5 13.3 15% 1.0 Americas Rest of Europe 16.3 16.4 19% UK & Channel 0
Slide 34: Breakdown of Assets under Management
Breakdown of Assets under Management 30.06.10 By category 31.12.09 30.06.10 (in CHF bn) Cash & Deposits 25.3% 24.6% 21.5 Bonds 17.2% 16.7% 14.6 Equities 26.6% 26.1% 22.8 Structured products 8.9% 10.5% 9.2 Loans 9.5% 10.4% 9.0 Hedge Funds / Funds of HFs 10.1% 9.5% 8.3 Other 2.4% 2.2% 2.1 Total 100.0%
Slide 35: Details on goodwill & intangibles position as of June 2010
Details on goodwill & intangibles position as of June 2010 (in CHF m) 31 Dec 2009 Action 30 June 2010 Specialist Product Businesses Goodwill / Asset Total Goodwill & Intangible assets Goodwill Total Write-down intangible assets MBAM 224.4 259.0 483.4 Fully 0.0* CMA 11.1 188.9 200.0 Fully 0.0 DSAM 10
Slide 36: Segmental breakdown
Segmental breakdown Private Banking and Wealth Management Asset Management Corporate center Marble Bar Asset Management Rest of (until 30 April 2010) Swiss Asia Americas UK Europe C. M. Advisors (CMA) EFG Financial Products Switzerland Hong Kong USA & Canada France UK & Asset Management Divisions of
Slide 37: 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 44.5 61.9 68.7 67.5 Segment expenses (71.8) (37.6) (35.5) (47.0) (62.1) (69.8) Profit before tax 47.0 8.0 6.5 12.9 1.3 (13.8) Net profit 42.2 6.6 6.5 9.8 5.
Slide 38: Segmental breakdown – 1H 2009
Segmental breakdown – 1H 2009 Performance Rest of Asset Swiss Asia Americas UK summary Europe Management Segment revenues 125.6 41.8 31.2 74.2 57.7 87.0 Segment expenses (79.4) (31.9) (31.0) (46.9) (60.2) (50.8) Profit before tax 38.6 6.8 (2.1) 23.5 (8.0) 0.1 Net profit 31.6 5.6 (1.5) 20.0 (5.0) (3.
Slide 39: 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