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Research Tree provides access to ongoing research coverage, media content and regulatory news on EFG INTERNATIONAL AG. We currently have 6 research reports from 1 professional analysts.
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EFG INTERNATIONAL AG
EFG INTERNATIONAL AG
Weak H1 16 figures
27 Jul 16
Pre-tax profit decreased by 42% to CHF34m for H1 16 compared to H1 15. Operating income was down by 3% to CHF342m for H1 16. Operating expenses rose by 1% to CHF299m in H1 16. The tax ratio was 23% in H1 16 compared to 13% for H1 15. The net result attributable to ordinary shareholders declined by 54% to CHF22.3m for H1 16 compared to H1 15. Assets under Management were down by 3% to CHF80.6bn at the end of H1 16 compared to the end of 2015. Net new money was an outflow of CHF0.1bn for H1 16 compared to an outflow of CHF0.3bn in H1 15. The BIS capital ratio was 22.8% at the end of June 2016 and the CET 1 was 18.5% on a Basel 3 basis.
Scandal around BSI
24 May 16
EFG announced this morning that Swiss banking regulator FINMA has approved the acquisition of BSI and is supporting the acquisition. However, EFG additional said “EFG International has further taken note of FINMA’s and MAS’ press releases in connection with the BSI-related 1MDB matter. The share purchase agreement with BTG Pactual has an indemnity in relation to these and certain other matters up to the overall purchase price. It was agreed in the share purchase agreement that the indemnity will be backed by a material Swiss escrow account which, at closing, will contain 51.0m EFG shares issued to BTG as consideration, with shares locked up for two years. The fine and the penalty will result in a reduction in the purchase price. The indemnities and escrow account remain unchanged.” FINMA announced this morning that BSI is in serious breach of money laundering regulations: “Through business relationships and transactions linked to the corruption scandals surrounding the Malaysian sovereign wealth fund 1MDB, BSI AG committed serious breaches of money laundering regulations and “fit and proper” requirements. This is the outcome of enforcement proceedings launched by the Swiss Financial Market Supervisory Authority, FINMA. In the case of 1MDB, the bank has executed numerous large transactions with an unclear purpose over a period of several years and, despite clearly suspicious indications, did not clarify the background to these transactions. Among other measures, FINMA has ordered the disgorgement of profits amounting to CHF95m. FINMA has also launched enforcement proceedings against two of the bank’s former top managers. At the same time, FINMA announced its approval of the takeover of BSI by EFG International with the condition that BSI will be integrated and thereafter dissolved. This takeover is a positive development providing clients and employees with a perspective for the future.”
BSI acquisition catapults EFG on a new level but poor execution track-record
22 Feb 16
EFG International (EFG) and BSI announced today that they will join forces to form a leading Swiss private bank. EFG has agreed with the BSI owner BTG Pactual the purchase of BSI to be paid in cash for a total of CHF975m, and through the issuance of 52.6m EFG shares to BTG Pactual against a contribution in kind, subject to certain adjustments in case of dilution. As a result of the share issuance, BTG Pactual will have a stake of approx. 20% in EFG International and representation on its board of directors, subject to shareholder approval. Applying EFG’s closing price of CHF6.70 on 19 February 2016 to the 52.6 million shares, the total purchase price would amount to c.CHF1.33bn, including agreed adjustments currently estimated at CHF25m. Pending shareholder approval at EFG International’s Annual General Meeting scheduled for 29 April 2016, EFG intends to raise capital through a CHF500m rights offering, as well as in the form of CHF250m Additional Tier 1 instruments (CoCos). EFG's biggest shareholder, EFG Group, has committed to invest at least CHF125m in the intended rights offering. In addition, EFG has obtained commitments for a volume underwriting of CHF375m from international investment banks. If the intended rights offering is not fully subscribed, BTG Pactual and EFG Group have committed to subscribe additional shares or Additional Tier 1 instruments for the purpose of providing deal-financing certainty. On a combined basis as of 31 December 2015, BSI (unaudited results) and EFG had assets under management of c.CHF170bn, which would imply the position of the fifth largest private bank in Switzerland regarding EFG. Based on optimised infrastructure costs and efficiency gains, the EFG and BSI target pre-tax cost synergies of approx. CHF185m p.a., or around 15% of the current combined cost base, should come into full effect in 2019. More than half of the targeted cost synergies are intended to result from the migration to one common IT platform. Total one-off estimated implementation costs of c.CHF200m are expected to be recognised until year-end 2018. Even assuming a potential attrition rate of around 5-10% of combined assets under management (with an estimated impact on profit before tax of c.CHF60-105m), the transaction is expected to be accretive to earnings per share from 2018 onwards. Subject to shareholder and regulatory approvals, completion of transaction is expected in Q4 16.
Disappointing H2 15 earnings despite profit warning
22 Feb 16
Net result attributable to ordinary shareholders decreased by 7% to CHF57m for FY2015. Operating income was down by 3% to CHF697m for 2015 compared to 2014. Operating expenses rose by 5% to CHF604m in the same period. EFG said that reported profit was impacted by exceptional legal and professional charges and provisions, including a payment of $29.9m for the formal resolution of the US Tax Programme. Pre-tax profit decreased by 10% to CHF72.5m for 2015. Assets under management declined by 1% to CHF83.3bn at end 2015 compared to a year earlier. Net new money inflow was CHF2.4bn in 2015 compared to CHF4.4bn for 2014. On a Basel III (fully applied) basis, EFG International’s BIS Capital Ratio stood at 16.8%, compared with 18.7% at end 2014. The Common Equity Ratio (CET 1) was 12.8% at the end of December 2015, down from 14.2%. The dividend per share proposal is unchanged at CHF0.25 for FY2015. We refer to the BSI acquisition in a special update.
Profit warning for H2 15
23 Nov 15
EFG released a statement in which it comments on business performance. Net new asset growth was 8% on an annualised basis during the period July to October 2015. Revenue-generating Assets under Management were CHF83.4bn at end-October, up from CHF80.2bn at end-June 2015. EFG said that operating income and the revenue margin remain below expectations, as in the first half of 2015. As a result, underlying net profit will be lower than the level attained in the first half. EFG International recognises the need to improve profitability fundamentally. The cost review has identified measures including efficiency improvements, a reduction in the number of marginal offices, and a reduction in headcount of 200 employees. These measures represent a reduction of c.5% or CHF30m, with associated one-off restructuring charges of up to 50% of this amount. These savings, to be realised in full by the end of 2016, will reset the cost base and finance growth initiatives. EFG International is due to report its annual results on 24 February 2016 when it will provide more details on both cost savings and growth initiatives.
Disappointing H1 15 figures
29 Jul 15
Pre-tax profit was CHF59m for H1 15 compared to CHF2m for H1 14 and dropped by 25% compared to H2 14. Operating income was up by 3% to CHF353m for H1 15. Operating expenses rose by 7% to CHF296m in H1 15. EFG was impacted by litigation provisions of CHF64m for H1 14, of which CHF33.7m in litigation-related charges and provisions, including CHF26.3m related to the outcome of a long-standing legal action in Switzerland and CHF30m in relation to the US Tax Programme. The net result attributable to ordinary shareholders was a profit of CHF48m for H1 15 compared to a loss of CHF6m for H1 14 and a profit of CHF67m for H2 14. Assets under Management were down by 5% to CHF80bn at end H1 15 compared to end 2014. Net new money was an outflow of CHF0.3bn for H1 15 compared to an inflow of CHF2.7bn in H1 14. The BIS capital ratio was 17.8% at the end of June 2015 and CET 1 was 13.9% on a Basel 3 basis.
Mobilising the strategy
08 Dec 16
PCF has reported a good set of FY16 figures this morning. Pro forma 12 month adjusted pre-tax profit increased 38% YoY to £4.0m (FY15: £2.9m), 5% ahead of our estimate of £3.8m. Fully diluted return on equity remained broadly stable YoY at 13% but beat our forecast of 12.6%, driven by good loan book growth, up 14% YoY to £122m. Given the strength of the results the board has reinstated a dividend of 0.1p per share. Following Tuesday’s announcement of the approval of a banking licence, we believe that the group now has the capacity to accelerate its growth prospects. While the shares trade at 12.0x earnings and 2.0x reported book value, we do not believe this valuation captures the growth potential of the business.
VPC Speciality Lending Investments PLC – sticking to your knitting pays dividends
05 Dec 16
A 25% discount on a dividend paying vehicle suggests either (a) lack of belief in the NAV, (b) lack of belief in the dividend, (c) concerns over future delivery, (d) a shareholder’s base not normally exposure to “closed end structures” or (e) some combination of (a) to (d). We had a first meeting with the management team and London representative of VPC Speciality Lending to try to better understand why the share price had fallen quite so much.
Small Cap Breakfast
07 Dec 16
Creo Medical group—Schedule 1 update.. £20m raise. Expected market cap £61.2m, admission expected 9 December. ECSC—Schedule 1 from provider of cyber security services. Raising £5m. Vendor sale £0.8m. Target date 14 Dec. Expected market cap £15m. RM Secured Direct Lending - The secured direct lending fund intends to float on the Main Market on 15 December raising up to £100m
Better Capital – A tale of two funds
05 Dec 16
Our gut feel on the results is that BCAP’s Gardner disposal feels viable (albeit as a late Q1 transaction). Post Gardner, the exit profile for BCAP’s portfolio is slanted towards the years 2018/19 and not earlier; we view the market’s current pricing as cautious (14% disc to our estimate of FV). In contrast, BC12’s more consumer facing portfolio remains a work in progress and may well offer further disappointment before turning a corner; the market valuation (51% discount to NAV) is cautious but probably fair given the difficulties.
Panmure Morning Note 07-12-2016
07 Dec 16
PCF today announces that it has succeeded in achieving once its major strategic goals by being granted a UK banking licence. In line with prior guidance, the company aims to begin taking deposits in summer 2017 and will initially focus on lending to its core markets in consumer motor finance and SME asset finance. As well as supporting growth in the loan book, the banking licence will both diversify and reduce the cost of its funding base. More details are expected as part of the FY16 results tomorrow.
Meeting near-term headwinds
06 Dec 16
In its trading update IFG reported that performance has been in line with management expectations. The cooling effect of market uncertainty on growth in James Hay and financial advice client numbers, together with the impact of low interest rates, remain a near-term head wind for revenues. Even so, with Saunderson House continuing to increase profits, IFG expects to match 2015 earnings. The long-term growth opportunity presented by an ageing population and pension freedoms remains in place and to address this IFG is continuing investment to enhance its service and increase operational gearing.