Financial Results
EFG International Says On Course To Surpass 2022 Net Profit; Logs Net Inflows
Continental Europe and the Middle East regions generated the largest amounts of net new assets, and Asia momentum accelerated as new client relationship officers made an impact. There were outflows in Switzerland and Italy, however.
Zurich-listed EFG International
yesterday reported a net profit of SFr240 million ($270 million)
for the first 10 months of 2023, putting it on course to beat the
full-year result of SFr202 million for 2022.
The firm logged net new assets of SFr5.2 billion for the year to
date, equating to an annualised growth rate of 4.2 per cent. The
Continental Europe and Middle East Region continued to generate
the highest net new assets and the Asia-Pacific region
accelerated its growth momentum, reflecting strong contributions
from new client relationship officers hired in early 2023, it
said in a statement. The Switzerland and Italy region experienced
net outflows in the year to date, partly reflecting deleveraging,
it continued.
“New CROs have started to contribute meaningfully to inflows in
the second half of 2023 and are expected to accelerate EFG’s
growth momentum going forward,” it said. More than 130 new CROs
were hired in the first 10 months of 2023, up from 75 in the
first half of 2023.
Assets under management came in at SFr144.1 billion for the year
to date, up from SFr143.1 billion at end-2022, mainly reflecting
the impact of negative foreign exchange movements, offset by net
new assets.
Like some of its Swiss and European rivals, EFG International is
operating in what has been a turbulent time for banking,
particularly given the demise of Credit Suisse, Switzerland’s
second-largest bank, and the subsequent “shotgun wedding” with
UBS. This publication has heard of how former Credit Suisse
private bankers are looking to relocate. An open question is how
many clients they take with them.
Buffers and buybacks
In other figures, EFG International reported a cost/income ratio
of 74 per cent for the 10-month period, narrowing from 76 per
cent from the full-year 2022 figure. Excluding initial one-off
hiring costs, the ratio was 71 per cent.
“While higher interest rates have supported our operating income,
the current economic uncertainty and deteriorating markets have
increased the risk aversion of our clients and we have seen
continued deleveraging in some regions over the last four
months,” Giorgio Pradelli, chief executive of EFG International,
said.
“At the same time, we have seized strategic opportunities and
have made significant investments to expand our talent base and
client coverage. Several of our new CROs have already started to
contribute meaningfully to asset inflows in the year to date, and
we expect this trend to continue and to significantly accelerate
our growth momentum in 2024 and beyond, given the strong pipeline
of net new money,” he said.
EFG said its Common Equity Tier 1 capital ratio – a standard
international measure of a bank’s “shock absorber capital” – was
about 17.4 per cent at the end of October, and above the
regulatory minimum requirement of 8 per cent and EFG’s minimum
management floor of 12 per cent.
Citing its “strong capital position,” EFG said it has
decided to buy back up to three million additional EFG shares by
end-April 2024 to fund variable deferred share-based employee
compensation.