The Swiss firm said it recognises a need to fundamentally improve profitability and that a cost review has identified a range of measures, including staff reduction and other savings.

EFG International, the Swiss private banking firm, said today that assets under management stood at SFR83.4 billion ($81.76 billion) at the end of October, rising from SFr80.2 billion at the end of June, with net new asset growth running at 8 per cent on an annualised rate.

The firm said that when combined with significant investments in growth, profit continues to be depressed, with the weak end to the second quarter continuing into the second half of the year to date. As a result, underlying net profit will be lower than the level attained in the first half reporting period, it said in a statement today.

The firm said Asian business has recovered after suffering net outflows in the first-half reporting period and there has been a turnaround in its Swiss business, with net new asset growth in the top end of its target range of 5 to 10 per cent.

Apart from the US, reflecting the local economic situation, all business regions generated net new assets in the latest reporting period, it said.

The number of client relationship officers stood at 462 at end-October, up from 444 at end-June 2015. A total of 53 new CROs joined in the July - October period, compared with 36 during the first half.

“Business performance during the four months July to October continued to be adversely impacted by economic and market uncertainty, with concerns relating to emerging markets having a pronounced impact in September,” the firm said.

“In addition, income derived from asset and liability management continues to be constrained by the prevailing low interest rate environment. Operating income and the revenue margin therefore remain below expectations, as in the first half of 2015,” it continued.

Profit must improve
“EFG International recognises the need to fundamentally improve profitability,” it continued, stating that its cost review announced in July 2015 has identified measures including efficiency improvements, a reduction of marginal offices, and a reduction in headcount of 200 employees. These measures represent a cut of around 5 per cent or SFr30 million, with associated one-off restructuring charges of up to 50 per cent of this amount.

These savings, to be realised in full by the end of 2016, will reset the cost base and finance growth initiatives, EFG International said.

Separately, the firm said it “remains hopeful” that a settlement in relation to the US tax programme will be reached by the end of the year (referring to issues surrounding undeclared accounts held by US clients).

The life insurance re-underwriting project mentioned at the time of the half-year results is virtually complete, and EFG International said it did not expect the fair value to be lower than indicated in its half-year report, although income recognition will be lower going forward.