Efg International Ag · SIX:EFGN
Efg International — H1 2018 Earnings Presentation
39 slides from Efg International's earnings presentation, Jul 25, 2018
Slide 1: Half-year results presentation 2018
EFG International Half-year results presentation 2018 Zurich, 25 July 2018 Half-year results presentation 2018 Page 1
Slide 2: Important Legal Disclaimer
EFG International Important Legal Disclaimer This document has been prepared by EFG International AG (“EFG”) 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, purch
Slide 3: Agenda
EFG International Agenda • Highlights Giorgio Pradelli, CEO EFG International • Financial performance Dimitris Politis, CFO EFG International • Strategic priorities & outlook Giorgio Pradelli • Q&A All Half-year results presentation 2018 Page 3
Slide 4: Highlights
Highlights Half-year results presentation 2018 Page 4
Slide 5: 2018: Driving change to realise EFG's potential
2018: Driving change to realise EFG’s potential Continued progress in building a leading Swiss private bank AuM CHF 142.7 bn ・ Underlying net assets of CHF 3.3 billion at growth rate of 4.6%, within 2019 target Return to ・ First six-months period of positive net inflows since closing profitable Unde
Slide 6: Financial performance
Financial performance Note: 1H 2017 financial results have been restated for application of IFRS 9 reporting standard. Please find reconciliation in the appendix. Half-year results presentation 2018 Page 6
Slide 7: 1H18 financial results in perspective
EFG International 1H18 financial results in perspective Underlying NNA growth rate of 4.6%, underlying net profit of CHF 129.2 mn ・ Underlying NNA of CHF 3.3 bn, annualised growth rate of 4.6% within target range (3-6%) ・ AuM attrition of CHF 1.3 bn, in line with previous guidance Business developme
Slide 8: Financials summary
EFG International Financials summary 1H17 1H18 2H17 (IFRS 9 restated) Underlying net profit*, CHF m 129.2 99.0 66.0 IFRS net profit, CHF m 46.4 63.6 (123.4) Underlying operating income*, CHF m 604.6 639.8 562.5 Underlying revenue margin*, in bps 86 93+ 81 Operating income, CHF m 570.4 647.1 495.6 Re
Slide 9: Results highlights (I)
EFG International Results highlights (I) Underlying NNA showing positive trend Stable revenue base Underlying NNA evolution Underlying operating income (in CHF bn) (in CHF mn) 639.8 3.3 20.3 619.5 604.6 562.5 1.8 0.5 (1.3) Nov-Dec 2016 1H17 2H17 1H18 1H17 2H17 1H18 Slowdown of AuM attrition continue
Slide 10: Results highlights (II)
EFG International Results highlights (II) Operating expenses decreasing Improving underlying profitability Underlying operating expenses Evolution of underlying net profit (in CHF mn) (in CHF mn) Return on Tangible Equity 17.8% -8% 99.0 129.2 522.7 20.3 510.5 482.6 78.7 66.0 1H17 2H17 1H18 1H17 2H17
Slide 11: Results highlights (III)
EFG International Results highlights (III) Underlying profitability at CHF 129.2 mn, up 31% vs. 1H17 Evolution of underlying net profit (in CHF mn) • Business development and cost management driving underlying profit 5.4 129.2 growth 3.2 22.5 • Integration costs tapering off Fair value impact • Valu
Slide 12: Revenue-generating AuM development
EFG International Revenue-generating AuM development Underlying NNA of CHF 3.3 bn, annualised growth rate of 4.6% Revenue-generating AuM evolution (in CHF bn) +7% 0.3 3.3 142.7 142.0 (1.6) (1.3) 133.3 Jun 17* Dec 17 FX Market AuM attrition** Underlying NNA Jun 18 * Restated for reclassification of a
Slide 13: Evolution of NNA & AuM attrition
EFG International Evolution of NNA & AuM attrition Underlying NNA growing for three consecutive semesters Underlying NNA evolution AuM attrition evolution (in CHF bn) (in CHF bn) (1.3) 3.3 (2.2) (3.4) 1.8 0.5 (6.0) 4.6% annualised (1.3) growth Nov-Dec 2016 1H17 2H17 1H18 Nov-Dec 2016 1H17 2H17 1H18
Slide 14: Business development by region
EFG International Business development by region Growth in all regions, except for Switzerland & Italy region 1H18 AuMs as % of RoAuM* 1H18 AuM attrition 1H18 Underlying NNA Annualised growth CHF 142.7 bn total AuM (in bps) CHF 1.3 bn CHF 3.3 bn (in %) Switzerland & 44.6 31% 87 0.3 (1.5) -6% Italy C
Slide 15: Evolution of mandates penetration
EFG International Evolution of mandates penetration Current mandate penetration of 26.3% (discretionary mandates & funds) Evolution discretionary mandates & Investement Solutions funds penetration (in %, excl. loans) • Expanding and putting to use the enhanced Investment Solutions platform 26.3 23.9
Slide 16: Growth and productivity drivers – CRO performance
EFG International Growth and productivity drivers – CRO performance Continuous improvement of CRO efficiency to CHF 240 mn AuM per CRO (up 9% since 2017) Number of CROs 448 747 684 658 629 • Majority of CRO departures immediately following the closing of the BSI acquisition in late 2016 • Very limit
Slide 17: Underlying operating income (I)
EFG International Underlying operating income (I) Underlying operating income of CHF 604.6 mn Underlying operating income (in CHF mn) 136.0 140.1 140.8 • Underlying income 2.4% down on 1H17 (excluding one-off 93 bps 81 bps 86 bps gain of CHF 20.3 mn) and 7.5% up on 2H17 • Underlying income in 1H18 b
Slide 18: Underlying operating expenses
EFG International Underlying operating expenses Underlying operating expenses down 8% vs. 1H17, underlying cost-income ratio at 79.7% Underlying operating expenses (in CHF mn) 81.6% 90.2% 79.7% • Underlying operating expenses down 8% y-o-y and 5% vs. 3,404 3,366 3,219* 2H17 • Cumulative cost savings
Slide 19: Update on cost synergies from BSI transaction
EFG International Update on cost synergies from BSI transaction Delivery of an additional CHF 40 mn of cost synergies, in line to achieve 2018 target Cumulative targeted cost synergies (pre-tax) (in CHF mn) • IT migration generated majority of cost synergies 240 • Drivers of cost synergies for 2H18
Slide 20: Update on integration costs
EFG International Update on integration costs Cumulative integration costs of CHF 232.7 mn Evolution of integration costs (pre-tax) Breakdown of integration costs (pre-tax; P&L only) (in CHF mn) (in CHF mn) 250.0 Equity/BS P&L 36.8 232.7 90 87 98.1 42.7 47 45 10.0 42 43 38 36 55.1 32.7 19.3 18 15 35
Slide 21: Balance sheet
EFG International Balance sheet Strong and highly liquid balance sheet Total assets: Total liabilities & equity: CHF 41.5 bn CHF 41.5 bn Due to banks 0.5 • Loan-deposit ratio of 51% Cash & banks 12.3 • Liquidity coverage ratio (LCR) of 171% Treasury bills 1.2 Fair value Deposits 31.9 • Net stable fu
Slide 22: Capital position (I)
EFG International Capital position (I) Continued strong capital ratios, CET1 ratio of 17.6% Total Capital Ratios* Breakdown of RWAs* (in %) (in CHF bn) • Underlying profitability 21.0 21.5 boosting capital ratios 3.7 3.8 0.1 0.1 10.9 • Stable RWAs 10.8 1.5 1.3 2.2 2.2 • Leverage ratio (FINMA) of 4.5
Slide 23: Capital position (II)
EFG International Capital position (II) 1H 2018 underlying capital generation of 140 bps Evolution of Total Capital ratio* (in %) Underlying capital generation 0.2 1.4 (0.4) (0.4) 21.5 (0.3) 21.0 31 Dec 2017 Underlying P&L Dividend Integration costs RWA decrease Currency translation & 30 Jun 2018 ot
Slide 24: Strategic priorities & outlook
Strategic priorities & outlook Half-year results presentation 2018 Page 24
Slide 25: EFG's change story
EFG’s change story Executing the 2016-2019 plan and continuing transformation of business • Strengthening competitive market position as a leading Swiss private bank • Capturing significant potential through economies of scale • Delivering profitable and sustainable growth Acquisition Integration Tr
Slide 26: EFG's value proposition
EFG International EFG’s value proposition Building a leading Swiss private bank based on EFG’s competitive strengths Clear-cut Strong client focus Client solutions geographic presence Entrepreneurial approach Market-specific services & Extensive range of investment, with CRO client partnership advic
Slide 27: Driving change: EFG's focus areas for 2018
EFG International Driving change EFG’s focus areas for 2018 Drive profitable and sustainable growth • Sharpen focus of private banking business, EFG’s programmes leveraging the CRO model Focus on 7 key areas to sustainably grow business, manage • Redefine strategy for Swiss business costs, improve c
Slide 28: Confirming 2019 operational targets
EFG International Confirming 2019 operational targets • Continually growing revenue-generating Assets under Management with Net new assets targeted annualised growth rate of between 3% to 6%1 Cost-income ratio • Targeting a cost-income ratio of below 70%2 Revenue margin • Achieving a revenue margin
Slide 29: EFG International Half-year results presentation 2018 Page 29
EFG International Half-year results presentation 2018 Page 29
Slide 30: Appendix
Appendix Half-year results presentation 2018 Page 30
Slide 31: Income statement (IFRS)
EFG International Income statement (IFRS) (in CHF million) 1H 2017 2H 2017 1H 2018 Net interest income 160.5 184.8 177.7 Net banking fee & commission income 315.1 302.2 295.1 Net other income 171.5 8.6 97.6 Operating income 647.1 495.6 570.4 Personnel expenses (356.0) (370.0) (355.4) Other operating
Slide 32: Balance sheet (IFRS)
EFG International Balance sheet (IFRS) (in CHF million) Dec 2017 Jun 2018 Cash and balances with central banks 9,700 9,169 Treasury bills and other eligible bills 1,482 1,165 Due from other banks 2,576 3,151 Derivative financial instruments 696 877 Financial asset at fair value through P&L 2,192 1,9
Slide 33: Update on Life Insurance Policies
EFG International Update on Life Insurance Policies Life Insurance related portfolio • Following the early adoption of IFRS 9, the Group’s IFRS P&L is sensitive to fluctuations in death benefits received • Life insurance impact on the Group’s P&L as of 30 June 2018 is CHF (36.4) mn • CHF (13.9) mn o
Slide 34: Reconciliation of 1H 2017 results for IFRS 9
EFG International Reconciliation of 1H 2017 results for IFRS 9 1H 2017 1H 2017 (IFRS 9 restated) (as published) Restatements largely due to: Underlying net profit, CHF m 99.0 74.5 IFRS net profit, CHF m 63.6 19.2 • Gains under IFRS 9 for life Underlying operating income, CHF m 639.8 621.5 insurance
Slide 35: Breakdown of AuM
EFG International Breakdown of AuM 30.06.18 By category 31.12.17 30.06.18 (in CHF bn) Cash & deposits 25% 25% 34.6 Bonds 25% 24% 33.2 Equities 23% 22% 31.0 Structured products 3% 3% 4.6 Loans 13% 13% 18.9 Hedge funds 3% 3% 4.4 Other 8% 10% 16.0 Total 100% 100% 142.7 30.06.18 By currency 31.12.17 30.
Slide 36: Segmental analysis 1H 2018
EFG International Segmental analysis 1H 2018 Global Performance summary Switzerland, Continental Americas UK Asia Investment Markets & Coporate Eliminations Total in CHF m) & Italy Europe Solutions Overheads Treasury Segment revenues 155.4 101.8 62.4 68.3 76.9 49.4 86.0 (29.8) - 570.4 Segment expens
Slide 37: Segmental analysis 1H 2017
EFG International Segmental analysis 1H 2017 Global Performance summary Switzerland, Continental Americas UK Asia Investment Markets & Coporate Eliminations Total in CHF m) & Italy Europe Solutions Overheads Treasury Segment revenues 181.3 95.7 70.8 66.4 80.6 52.9 74.1 25.3 - 647.1 Segment expenses
Slide 38: Segmental analysis 2H 2017
EFG International Segmental analysis 2H 2017 Global Performance summary Switzerland, Continental Americas UK Asia Investment Markets & Corporate Eliminations Total in CHF m) & Italy Europe Solutions Overheads Treasury Segment revenues 166.3 99.9 67.2 65.0 82.5 60.7 67.1 (113.1) - 495.6 Segment expen
Slide 39: Contacts
EFG International Contacts Investors Media Investor Relations Marketing & Communications Jens Brueckner Daniela Haesler Head of Investor Relations Head of Marketing & Communications Phone +41 44 226 1799 Phone +41 44 226 1804 jens.brueckner@efginternational.com daniela.haesler@efginternational.com E