Things are looking up at EFG International: the bank returned to profitability in 2018 and has decided to raise its dividend. It is also hiring new bankers and has also made an acquisition in Asia-Pacific.
EFG International, the Swiss-based private bank, recorded a profit of 70.3 million Swiss francs ($69.8 million) in 2018, the company said in a statement on Wednesday. The bank had gotten into trouble following the takeover of BSI Bank and had posted a loss of almost 60 million francs the year before.
Underlying net income was significantly higher, reaching 191.8 million francs. EFG International’s IFRS net included 75.3 million francs in integration costs, a negative impact of 26.9 million francs from the life insurance portfolio, a 6.4-million-franc amortization charge and 12.9 million francs in legal costs and provisions relating to legacy matters.
AUM Growth in 2019
The positive development at the private bank mainly reflected a decisive push to lower costs. Underlying operating expenses declined 6 percent to 966.4 million francs. EFG achieved cumulative pretax cost synergies of 187 million by the end of 2018, exceeding its target of 180 million. For this year, EFG aims to increase that figure to 240 million francs.
Assets under management continued to decrease in 2018, albeit at a slower pace, reaching 131.2 billion francs at the end of the year (down from 142 billion a year earlier). The decline reflected adverse market effects of 5.9 billion francs, foreign exchange impacts of 1.9 billion and attrition of 4.6 billion. Underlying net new assets amounted to 2.5 billion francs. Since the beginning of the year, assets have recovered some ground, reaching 135.4 billion francs by the end of February, EFG added.
Having returned to profit, EFG International now plans to increase the dividend to 0.30 francs per share from a previous 0.25 francs per share.
Hiring and Acquiring
The number of relationship managers declined to 590 by the end of 2018 as a consequence of the reorganization. A year earlier, the bank had 644 relationship managers. Currently, the bank is hiring scores of new relationship managers, having already added 50 client relationship officers by the end of February. It is also looking to add new teams.
Last but not least, the bank announced that it would buy a majority stake in Shaw and Partners, an Australian financial service provider, in a bid to boost its presence in Asia-Pacific. Shaw and Partners has 11.4 billion francs in assets under management.