Assets Rise At EFG; Interest Rate Environment Hurts Underlying Profit

Tom Burroughes

26 February 2020

, the Zurich-listed private bank, today reported that it logged SFr5.2 billion ($5.32 billion) in net new assets during 2019, contributing to total assets under management of SFr153.8 billion at the end of the year.

The net new asset growth rate last year was 4 per cent, in line with EFG’s target range. The rate increased in the second half of 2019, rising to an annualised figure of 6.6 per cent, EFG said in a statement. Assets under management rose by 17.2 per cent on a year earlier.

The group reported a net profit attributable to shareholders, on IFRS accounting standards, of SFr94.2 million, rising by 34 per cent from the level in 2018 and buoyed by higher operating income and lower costs.

On an underlying basis, however, profits fell to SFr108.7 million from SFr191.8 million, affected by large spending on growth in the business and the tough interest rate environment. (Like other Swiss-based banks, EFG contends with negative official Swiss central bank interest rates.)

EFG said it continued to keep costs under control, realising targeted cost reductions of SFr55 million on a pre-tax basis in 2019, turning into total cumulative savings of SFr242 million.

The firm said it clocked up a record year in hiring client relationship managers last year, recruiting 181 CROs, and beating its original guidance targets. EFG had a total of 3,151 (full-time equivalents) staff at the end of 2019. On a like-for-like basis, excluding Shaw and Partners (an acquired business), the number of employees was 3,412 (FTEs) at the end of 2019, down from 3,153 at the end of 2018.

EFG International said it had a total capital ratio – a measure of its financial strength – of 20.1 per cent. It proposed to pay a dividend of SFr0.3 SFr per share, unchanged from a year earlier.