Private Banks

EFG results show strong growth in business in 2020

In 2020, EFG significantly grew its business with a marked acceleration in profitability, especially in the second half of the year, and demonstrated its operational and financial resilience against the backdrop of the pandemic.

EFG has announced it's 2020 results - growing the business with 5.5% NNA increase and IFRS net profit up 22%.

In 2020, EFG significantly grew its business with a marked acceleration in profitability, especially in the second half of the year, and demonstrated its operational and financial resilience against the backdrop of the pandemic.

Highlights include: 

  • EFG accelerated its growth momentum with its strongest net new asset* inflows in a decade of CHF 8.4 billion for the full year, corresponding to a growth rate of 5.5%.
  • Assets under Management increased to CHF 158.8 billion from CHF 153.8 billion at end-2019, as strong asset inflows and positive market effects offset adverse foreign exchange impacts.
  • IFRS net profit increased by 22.4% to CHF 115.3 million.
  • Strong acceleration of profitability in 2H20, as effects from revenue and cost management measures materialised. Net profit more than doubled compared to the first half of 2020 and underlying* cost/income ratio improved to 78.2%.
  • EFG continues to rationalise its footprint and optimise the operational set-up of its eight core offshore booking centres.
  • EFG maintained strong capital and liquidity positions, with a Swiss GAAP CET1 ratio of 16.2%, Total Capital Ratio of 19.9% and an Liquidity Coverage Ratio of 183%. In January 2021, EFG further strengthened its capital position as it successfully placed USD 400 million of Additional Tier 1 Notes and bought back approximately 50% of outstanding Tier 2 Notes.
  • Proposed dividend of CHF 0.30 per share, unchanged from last year.

 

Giorgio Pradelli, CEO of EFG International said "In 2020, as the global spread of the coronavirus sparked uncertainty around the globe, our teams showed great commitment and strength as they adapted to these new circumstances and continued to put our clients first. We invested in enhancing our digital capabilities to ensure a high level of connectivity and supported our clients with our extensive expertise and tailor-made private banking services. This is also reflected in our results, as we accelerated our net new asset growth momentum and boosted profitability. Despite continued pressures on net interest income, our core business performed well– especially in the second half of the year. We expect to see similar trends going forward, as we continue to invest in growth initiatives and enhance our operational efficiency."

 

In 2020, EFG accelerated its growth momentum as it continued to execute its 2022 strategic plan and further developed its business while simultaneously improving its operational efficiency.

  • It increased net new asset inflows and returned all its business regions to growth. In addition, EFG’s new locations – including Australia, Milan, Lisbon, Porto and Dubai – recorded strong net new assets of CHF 2.7 billion in 2020.
  • EFG continued to invest in target growth markets and increased its majority stake in Shaw and Partners from 51% to 61% – with the option to further increase its stake to 75% in 2021.
  • As part of its investment-led approach, EFG leveraged its extensive Investment Solutions capabilities – including its high-performing asset management business – to provide clients with relevant insights and tailor-made solutions. Accordingly, EFG improved its advisory and discretionary mandate penetration from 47% at end-2019 to 49% at end-2020.
  • In 2020, EFG accelerated the rationalisation of its international footprint and the optimisation of its eight main offshore booking centres, with the full positive effects expected to materialise in 2021. This included the sale of its Ticino-based retail business and of its entities in Chile and France, as well as the transfer of its Guernsey business to other booking centres. As part of these continuous efforts, EFG is also announcing the reorganisation and streamlining of its fund management business with the sale of its Luxembourg fund management company, EFG Fund Management S.A., subject to regulatory clearance.

 

For the second consecutive year, EFG achieved net new asset growth within its 4-6% target range and it significantly improved its underlying cost/income ratio, which was 78.2% for the second half of 2020, as well as its return on tangible equity, which increased to 11.4% for the second half of 2020. In light of structural pressures, the revenue margin remained subdued, but EFG is implementing respective revenue management and repricing measures to mitigate these effects, as it already significantly improved the quality of its revenues based on its increased net commission income.

 

Outlook: Maintaining positive momentum and driving profitability 

EFG has seen strong levels of client activity in the first weeks of 2021 and has a promising pipeline in terms of net new assets. Going forward, EFG is confident that it will maintain its growth momentum and further improve profitability on the back of ongoing revenue management and cost reduction measures. In line with this,

EFG plans to strengthen its margin levels and mitigate the effects of the persistently low interest rate environment, by leveraging its extensive Investment Solutions offering to provide clients with high-value products and services. In addition, to enhance its operational efficiency, EFG will further rationalise its international booking centre footprint and optimise its operational set-up by centralising certain corporate functions and automating internal processes. EFG remains on a positive trajectory to realise its strategic targets and further strengthen its competitive market position.