Financial Results

Profits Surge At EFG International, Shares Rise

Tom Burroughes Group Editor 22 February 2024

Profits Surge At EFG International, Shares Rise

Financial results from the Swiss firm cheered investors – shares gained yesterday – and it was able to point to higher profits, broadly steady costs and net inflows. The stronger Swiss franc did, however, dent the AuM result slightly.

EFG International, the Zurich-listed private bank and wealth management group that operates in several regions, yesterday reported a rise in net profit of SFr303.2 million ($344.4 million), up from SFr202.4 million a year ago. Operating income rose to SFr1.43 billion from SFr1.27 billion.

Operating expenses rose to SFr1.057 billion from SFr975 million.

The widening in profit, among other factors, narrowed the cost/income ratio to 73 per cent from 76 per cent a year earlier. The number of EFG full-time staff rose to 3,025 from 2,828.

Investors appeared to cheer the figures: Shares in EFG were up about 5.5 per cent around 13:00 Swiss time yesterday, at SFr12.48 per share. Prices are up by about 18 per cent so far this year.

Net new assets at the end of 2023 totalled SFr6.2 billion, corresponding to a net new asset growth rate of 4.4 per cent, which is within EFG’s target range of 4 to 6 per cent. EFG said client relationship officers (CROs) who joined the firm last year “contributed significantly” to total net new assets.

The Asia-Pacific region recorded net new assets of SFr3.7 billion in 2023, with strong performance across all locations and with new CROs already contributing significantly to these strong inflows. The Continental Europe and Middle East region generated SFr2.9 billion of net new assets, followed by the Latin America region with SFr1.7 billion and the UK region with SFr200 million. The Switzerland and Italy region recorded SFr1.5 billion of outflows, due to de-risking and deleveraging in a volatile market environment.

Investment solutions and wealth solutions experienced total outflows of SFr800 million, EFG said.

Revenue-generating assets under management totalled SFr142.2 billion at the end of 2023, compared with SFr143.1 billion at the end of 2022. This marginal decrease stems from negative foreign exchange impacts of SFr10.2 billion due to the strengthening of the Swiss franc, especially in the final quarter of 2023, which offset net new assets of SFr6.2 billion and positive market performance of SFr4.7 billion.

“Our record profit and our strong operational performance demonstrate that we are delivering on our strategy more rapidly than originally envisaged, which puts us a year ahead of plan. This strong start to the 2023 to 2025 strategic cycle is a testament to our well-diversified business model and the great commitment of our colleagues as we continue to navigate a volatile operating environment with many unforeseen developments that caused disruption both in Switzerland and abroad,” Giorgio Pradelli, CEO of EFG International, said. 

“We made strategic investments in EFG’s future growth in 2023 by hiring a significant number of new client relationship officers as we expanded our talent base to further strengthen our offering and reach,” he said. 

Return on tangible equity rose to 18.2 per cent from 13.4 per cent.

EFG International’s Common Equity Tier 1 ratio – a bank’s capital “shock absorber” – was 17 per cent, rising from 14.7 per cent in 2022.

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