Efg International Ag · SIX:EFGN
Efg International — H1 2009 Earnings Presentation
45 slides from Efg International's earnings presentation, Jul 28, 2009
Slide 1: Half year results presentation 2009
Half year results presentation 2009 Zurich, 28 July 2009 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 4.0 Summary 3
Slide 4: A disappointing 1H performance
A disappointing 1H performance vs. 1H 08 vs. 2H 08 CROs 674 7% 7% AUM CHF 80.4 bn 17% 7% Private client CHF 4.7 bn 65% flat net new assets Revenues CHF 412.1 m 22% 2% Net profit CHF 20.0 m 89% 54% 4
Slide 5: A confluence of pressures
A confluence of pressures Particularly challenging conditions for EFGI • Turbulent market and economic environment. • Clients very cautious. • Investments in growth over past couple of years. Number of businesses in formative stages. • Difficult environment for specialist product businesses, particu
Slide 6: But a solid business
But a solid business • Profitable, albeit not at an acceptable level. • Good liquidity and strong capital position. • Clients and employees retained. • Private client businesses still generating double-digit net new asset growth; total AUM at CHF 77 bn up from CHF 69.9 bn. • All main asset managemen
Slide 7: Cost measures initiated
Cost measures initiated • Net reduction in CROs. • Ongoing general cost reduction programme. • Closing number of sub-optimal locations. • Creation of dedicated asset management business. 7
Slide 8: Performance
1.0 Introduction 2.0 Performance Rudy van den Steen, CFO Current status, 3.0 outlook 4.0 Summary 8
Slide 9: Key performance indicators
Key performance indicators Average revenue- Private client net new Operating income RoAUM Net profit generating AUM (in CHF bn) assets (in CHF bn) (in CHF m) (in bps) (in CHF m) 178.7 89.6 89.4 13.5 527.6 102.2 118 77.2 418.7 412.1 107 53.0 4.7 4.7 94 43.2 20.0 1H08 2H08 1H09 1H08 2H08 1H09 1H08 2H0
Slide 10: Operating income
Operating income Net interest Net commissions Other income (in m) (in m) (in m) +21% -33% -43% 527.6 306.3 159.3 153.8 94.0 265.4 54.0 127.3 204.3 1H08 2H08 1H09 1H08 2H08 1H09 1H08 2H08 1H09 (6.0) • 21% increase in net interest • Non-HF average AUM declined by • 1H08 included approx. CHF 49 income
Slide 11: Return on AUM
Return on AUM Return on AUM Average AUM development (in bps) (in CHF bn) -13.8% 89.6 89.4 121 123 81.2 117 115 118 77.2 107* 107 72.5 65.5 94 48.2 1H06 2H06 1H07 2H07 1H08 2H08 1H09 1H06 2H06 1H07 2H07 1H08 2H08 1H09 • RoAUM below the target range but improved • Average revenue-generating AUMs are s
Slide 12: AuM development
AuM development (in CHF bn) • Annualized private client growth rate in net new assets was 14% • Overall modest growth in net new 80.4 assets due to offsetting effect of hedge fund redemptions. 3.8 MBAM & 4.7 CMA • AUMs of MBAM & CMA 0.4 -2.5 businesses represent under 5% of 75.4 2.4 0.0 total AUM, i
Slide 13: Net new private client assets & HF assets
Net new private client assets & HF assets NNAs private client (in CHF bn) Evolution of Private Banking AUM vs HF assets MBAM & Private (in CHF bn) Total CMA Banking Dec 2008 5.5 69.9 75.4 13.5 Market movements 0.2 0.2 0.4 FX impact 0.2 2.2 2.4 6.4 HF redemptions (2.5) (2.5) 5.4 4.6 4.9 4.7 4.7 Net n
Slide 14: Regional breakdown of Assets under Management
Regional breakdown of Assets under Management Assets under Management – by region (in CHF bn)* • Switzerland: positive inflows • Asia: positive inflows Other Switzerland • Americas: market movements & inflows 14.6 (14.3) 19.6 • UK: mostly driven by FX variations Marble Bar (18.7) 2.7 (3.2) CMA 1.1 (
Slide 15: Breakdown of Assets under Management
Breakdown of Assets under Management • During 1H09 clients increased their exposure By category 31.12.08 30.06.09 30.06.09 to bonds, percentage of bonds of total AUM (in CHF bn) went up to 17.4% from 14.4% at the end of Cash & Deposits 28.9% 28.1% 22.5 2008 Bonds 14.4% 17.4% 14.0 • Highest reduction
Slide 16: Operating expenses
Operating expenses Personnel expenses (in CHF m) Other operating expenses (in CHF m) Cost-income ratio* (in %) +7% -15% 82.5 229.6 232.2 80.6 105.4 89.1 217.8 85.6 59.1 1H08 2H08 1H09 1H08 2H08 1H09 1H08 2H08 1H09 * CIR = Ratio of operating expenses before • Increased as a result of full period effe
Slide 17: Development of amortisation and tax rate
Development of amortisation and tax rate Amortisation of acquisition Effective tax rate related intangibles (in CHF m) (in %) 43.8 18.8 20.6 29.8 22.2 25.0 7.9 1H08 2H08 1H09 1H08 1H09 • Additional amount of CHF 18.8 m in • Tax rate reflection of performance 1H09 due to accelerated amortization shif
Slide 18: Normalised net profit
Normalised net profit Adjusted net profit (in CHF m) 178.7 • Accelerated amortization of intangibles at CMA (CHF 17 m) and other client relationship intangibles in the UK (CHF 1.8 m). • Non-cash charge 102.2 • A one-off charge of CHF 14.2 million was incurred when, at the end of February 2009, EFG I
Slide 19: P&L highlights
P&L highlights Adjusted* (in CHF million) 1H08 2H08 1H09 1H09 Average AUM (in bn) 89.6 89.4 77.2 77.2 Headcount 2,196 2,455 2,431 2,431 Operating income 527.6 418.7 412.1 426.3 RoAUM 118 bps 94 bps 107 bps Operating expenses (312.1) (345.5) (332.1) (332.1) CIR 59.1% 82.5% 80.6% Acquisition related i
Slide 20: Balance sheet highlights (I)
Balance sheet highlights (I) (in CHF m) Jun 30, 2008 Dec 31, 2008 Jun 30, 2009 Loans and advances to customers 8,510 7,424 7,843 Due to customers 15,515 14,213 15,734 Net funding from clients (in CHF bn) 6.8 7.9 Deposit/Loan Ratio 191% 200% Jun 30, 2008 Dec 31, 2008 Jun 30, 2009 Acquisition related
Slide 21: Breakdown of balance sheet
Breakdown of balance sheet Total assets: CHF 20.4 bn Total liabilities & equity: CHF 20.4 bn Generally AA rated banks & implicitly Due to banks 0.8 Cash & due Gov‘t backed from banks 5.0 Sovereign / AAA Treasury bills 0.4 2.9 highly rated Banks Derivatives 0.2 Available 0.4 highly rated US life Due
Slide 22: Balance sheet highlights (II)
Balance sheet highlights (II) Variation in financial instruments Impaired loans vs. total loan book (in CHF m) 0.26% 0.22% 0.4 -0.1 -0.6 0.0 5.2 4.9 0.04% 20.4 16.3 3.3 Dec 31, AFS Designated at Trading Held to June 30, June 08 Dec 08 June 09 2008 assets maturity 2009 Fair Value Cumulative loan Cumu
Slide 23: Capital developments
Capital developments Evolution of capital position Breakdown of RWAs (in CHF bn) 14.0% 12.5% 12.9% Total Capital Ratio 11.3% 12.5% 12.9% Tier 1 Ratio Lower 6.1 6.0 2.7% 6.0 Tier 2 0.3 0.7 0.3 12.5% 12.9% 1.3 1.6 1.6 11.3% Core Tier 1 4.5 4.1 3.7 June 08 Dec 08 June 09 June 08 Dec 08 June 09 Market /
Slide 24: Update & comments on treasury shares
Update & comments on treasury shares • In 2007 and 2008, EFGI Number of shares Average price per purchased 3.9 million shares to Date purchased share (CHF) hedge its potential obligations relating to the employee stock 2007 1.6 m ca. 46.00 option program • In 2009, between end of February 2008 2.2 m
Slide 25: Current status, outlook
1.0 Introduction 2.0 Performance Current status, 3.0 Lonnie Howell, CEO outlook 4.0 Summary 25
Slide 26: CRO recruitment
CRO recruitment • CROs up from 629 a year ago to 674; down from end-2008 (726). • 75 new recruits more than offset by 75 127 departures of underperforming CROs. 726 674 Net decline - 52 • Continue to address position of underperforming CROs. Dec 08 Hires Departures June 09 • Selective approach to hi
Slide 27: Cost reduction programme
Cost reduction programme Programme initiated earlier in year to reflect current business levels. Financial benefits will start to be seen in 2H 2009. Expected to save around CHF 40 m on an annualised basis, once cost measures become effective in 2H 2009 • Reduction of overall salary expenses. • Redu
Slide 28: Private client businesses - Overview
Private client businesses - Overview • Private client businesses: 95% of AUM. • The first four months of 2009 were challenging both in terms of net new assets and profitability. • Net new money inflows on the private client side mostly occurred in May and June 2009. • Client retention and strong net
Slide 29: Asset management - overview
Asset management - overview • Dec 08 AUMs: CHF 3.2 bn. • Dec 08 AUMs: CHF 2.3 bn. • Profitable during 1H 2009. • June 09 AUMs: CHF 2.7 bn. • June 09 AUMs: CHF 1.1 bn. • Matched expecations EFGI had • Performance: MBAM’s flagship fund when EFG FP was founded. • CMA’s AUMs decreased by CHF 1.3 up appr
Slide 30: New asset management business
New asset management business • Created distinct asset management business, under leadership of Jim Lee, former Deputy CEO. • Rationale for new business grouping: • Realise cost and revenue synergies. • Strengthen solutions support for CROs. • Facilitate doing more with existing clients and developm
Slide 31: New management structure
New management structure Executive Committee • Lawrence D. Howell, Chief Executive Officer. • Lukas Ruflin, Deputy Chief Executive Officer. • Rudy van den Steen, Chief Financial Officer & Head of M&A. • Alain Diriberry, Chief Operating Officer. • James T.H. Lee, Chief Executive Officer, Asset Manage
Slide 32: Outlook
Outlook • Optimistic that the second half of the year will see improvements. Follows improved business performance during May and June: • Private banking: net new assets growth concentrated in past few months. • Asset management: outflows now bottoming out. Encouraging levels of interest in new busi
Slide 33: Summary
1.0 Introduction 2.0 Performance Current status, 3.0 outlook 4.0 Summary Lonnie Howell, CEO 33
Slide 34: Summary
Summary • A particularly challenging six months for EFGI. • Business profitable albeit not currently at acceptable level. • But fundamentally a strong business. • Confident turning point has been passed. Sentiment improving and clients slightly less cautious. • Cost savings coming on stream H2 2009.
Slide 35: Practitioners of the craft of private banking
Practitioners of the craft of private banking www.efginternational.com 35
Slide 36: Appendix
5.0 Appendix 36
Slide 37: Consolidated income statement (unaudited)
Consolidated income statement (unaudited) (in CHF million) 1H 2008 1H 2009 Change Net interest income 127.3 153.8 20.8% Net banking fee & commission income 306.3 204.3 -33.3% Net other income 94.0 54.0 -42.6% Operating income 527.6 412.1 -21.9% Operating expenses (334.3) (375.9) 12.4% Provisions for
Slide 38: Consolidated income statement (unaudited)
Consolidated income statement (unaudited) Change (in CHF million) 1H 2008 2H 2008 1H 2009 vs. 2H08 Net interest income 127.3 159.3 153.8 -3.5% Net banking fee & commission income 306.3 265.4 204.3 -23.0% Net other income 94.0 (6.0) 54.0 NM Operating income 527.6 418.7 412.1 -1.6% Operating expenses
Slide 39: Consolidated balance sheet (unaudited)
Consolidated balance sheet (unaudited) (in CHF million) Dec 2008 June 2009 Change Cash and balances with central banks 115 183 59% Treasury bills and other eligible bills 74 375 407% Due from other banks 3,731 4,786 28% Derivative financial instruments 453 223 -51% Financial instruments 5,119 4,982
Slide 40: New segmental breakdown
New segmental breakdown Private Banking and Wealth Management Asset Management Rest of Marble Bar Asset Management Swiss Asia Americas UK Europe C. M. Advisors (CMA) Derivatives Structured Asset Management (DSAM) Switzerland Hong Kong USA & Canada UK & France EFG Financial Products Channel islands L
Slide 41: Segmental breakdown (unaudited) – 1H 2009
Segmental breakdown (unaudited) – 1H 2009 Rest of Asset Performance summary Swiss Asia Americas UK Europe Management Segment revenues 134.8 42.2 30.8 73.6 49.1 81.6 Segment expenses (102.8) (30.7) (31.7) (45.2) (57.7) (53.2) Profit before tax 24.4 8.3 (3.3) 24.5 (14.0) (7.8) Net profit 17.2 7.1 (2.7
Slide 42: Segmental breakdown (unaudited) – 1H 2008
Segmental breakdown (unaudited) – 1H 2008 Rest of Asset Performance summary Swiss Asia Americas UK Europe Management Segment revenues 177.1 46.3 37.8 68.5 51.2 146.7 Segment expenses (94.3) (29.6) (26.6) (50.4) (47.5) (55.0) Profit before tax 77.8 16.2 8.8 15.6 1.0 73.9 Net profit 63.5 14.3 7.4 13.8
Slide 43: Segmental breakdown (unaudited) – 2H 2008
Segmental breakdown (unaudited) – 2H 2008 Rest of Asset Performance summary Swiss Asia Americas UK Europe Management Segment revenues 99.1 49.4 34.9 75.5 55.6 104.2 Segment expenses (108.0) (33.9) (29.3) (48.1) (64.2) (51.5) Profit before tax (23.0) 14.6 2.9 20.0 (14.8) 28.4 Net profit (7.5) 12.3 (2
Slide 44: Assets under Management and Administration
Assets under Management and Administration Assets under Management and Administration (in CHF bn) 110.7 9.8 4.3 2.6 86.0 90.3 1.5 11.1 8.8 8.8 1.8 1.1 96.8 82.9 82.9 75.4 82.9 80.4 1H 2008 2008 1H 2009 Revenue-generating Announced acquisitions EFG International Shares Assets u. Administration 44
Slide 45: Contacts
Contacts Media Investors Strategic Marketing & Communications EFG International Investor Relations • Keith Gapp, Head of SMC • Jens Brueckner, Head of Investor Relations • Telephone: +41 44 226 1217 • Telephone: +41 44 226 1799 • E-mail: keith.gapp@efggroup.com • E-mail: jens.brueckner@efggroup.com