EFG International reported record first half profit growth of nearly 50 percent as it hired more private bankers with sizeable portfolios. More new money flowed into the Swiss lender as well.
Profit at EFG International increased 47 percent in the first half of the year to record 147.6 million Swiss francs ($170.7 million), as it hired 75 new relationship managers, according to results released Tuesday.
EFG said the experienced client relationship officers (CROs) bring «sizeable portfolios and other talents across functions and regions,» bringing the total number of CROs to 638, not including 429 from Shaw and Partners. The hiring, EFG said, reflects increased market competitiveness and its attractiveness as an employer.
«Our strong profitability, increased competitive market position and a promising net new asset pipeline allow us to seize strategic opportunities to accelerate our growth momentum and achieve scale. This includes our increased efforts to hire key talent across functions and regions, with 75 new [CROs] joining the bank, as well as our targeted investments in our digital capabilities, content innovation, and our brand,» said CEO Giorgio Pradelli.
Assets under Management
The firm saw revenue-generating assets increase 2.4 percent to 146.5 billion francs at the end of June from 143.1 billion francs at the end of last year. Net new assets contributed three billion francs, with positive market performance chipping in another 2.6 billion francs. Foreign exchange impacts trimmed 2.2 billion francs.
EFG deemed the inflows «subdued» in the current macroeconomic environment as clients deleveraged their portfolios. Inflows «rebounded strongly» in the second half. First-half annualized inflow growth was 4.2 percent, which is within the firm's target range of 4 to 6 percent growth.
Continental Europe and the Middle East contributed 1.5 billion francs of new assets followed by Asia Pacific with 1.1 billion francs followed by the UK and Latin America with 600 million francs and 500 million francs, respectively, while Switzerland and Italy saw 700 million francs of outflows, according to EFG.
Revenue Margin Increases
Based on the assets under management, EFG said its revenue margin increased 27 basis points to 100 basis points compared to the first half of last year, and nine compared to the second half.
The «significant increase» compared to the first half of 2022 was driven by the higher interest margin and the increased net other income margin, reflecting increased currency trading by clients and the positive contribution from the life insurance portfolio.
EFG’s net interest income increased by 64.1 percent to 249.4 million francs in the first half of 2023 from 152 million francs in the first half of 2022, reflecting the positive impact of rising interest rates across all major currencies.
Cost Income Ratio Improves
Operating income increased 20 percent to 724.8 million francs if the first half, while expenses were up 11 percent to 527.7 million francs, reflecting strong hiring momentum and higher accruals for variable compensation.
With that, the firm achieved a reduction in its cost/income ratio to 72.1 percent in the first half from 78.1 percent in the comparable period last year.
