Swiss private bank EFG International weathered the pandemic storm surprisingly well. But growth didn't come cheap.
In the midst of the Corona crash last March, EFG had issued a warning of a decline in performance. But the Zurich-based private bank set out to catch up, mainly in the second half of the year, and especially in terms of profitability, the company said in a statement on Wednesday.
Net profit rose to 115.3 million Swiss francs ($127.34 million), up 22.4 percent from a year earlier. On this basis, EFG intends to pay an unchanged dividend of 30 centimes per share.
Cost-Cutting Measures
A closer look reveals that profitability benefited from special effects as well as cost-cutting measures. The important cost/income ratio (CIR) improved to 78.2 percent, while an insurance portfolio resulted in a profit of 14.9 million.
By contrast, profitability overall declined, in particular, due to falling interest income (minus 10 percent). Against this background, operating income declined from 1.14 billion francs in the previous year to 1.11 billion francs. By contrast, commission income climbed by 10.6 percent and now accounts for 59 percent of the group's total income.
Growth proved to be moderate. Assets under management rose from 153.8 billion francs to 158.8 billion francs, despite net new money of 8.4 billion francs. EFG noted that all business regions contributed to growth. During the year, the bank hired 76 new client advisers – a key indicator in the bank's broker model. However, the total number fell from 815 to 772, and the average assets under management per banker increased to 254 million francs.
Strong Start
Some 49 percent of assets are now managed in discretionary mandates, which is significantly more than at large Swiss competitors. The growth did not come free of charge, however, as the institute invested in new offices in Australia, Milan, Lisbon, Porto and Dubai, which have now already contributed to new money.
According to a statement, the year 2021 has started promisingly, and the private bank is hoping for some new money. The firm now wants to both maintain the pace of growth and further improve its profitability.
