EFG International, the Swiss-based bank, has had a reasonably successful first half, despite the difficult markets and a troublesome acquisition. The bank now plans to deepen its cost-cutting program.
EFG International had a profit of 22.3 million Swiss francs in the first six months of 2016, the Zurich-based company said in a statement today.
The result was better than analysts had expected. Their forecast was for a net of 19 million, down 60 percent from the same period in 2015.
Risk-Adverse Customers
Operating profit dropped 3 percent to 341.7 million francs. It was hit by a decline in net banking fee and commission income of 8 percent, reflecting a decline in transactional revenues, risk adversity and low levels of client activity, as well as foreign-exchange impacts, the bank said.
Customers pulled 100 million francs out of the bank, which compares with a drop of 300 million a year earlier: «Net new asset generation was disappointing in the first quarter of 2016, while a positive momentum emerged across most regions towards the end of the second quarter 2016,» the bank said.
This echoes results at rival Julius Baer, which reported a very slow start to the year in gathering assets, then a pick-up in the second quarter.
Takeover on Course
EFG's revenue-generating assets under management declined to 80.6 billion by the end of the first half, down from 83.3 billion a year earlier. The drop reflects negative currency effects of 2 billion francs, primarily driven by foreign exchange swings following the Brexit decision.
EFG still intends to complete the takeover of BSI, the bank involved in the corruption scandal surrounding the Malaysian state fund 1MDB, in the fourth quarter.
The takeover is partly being financed by new capital agreed upon by a shareholder meeting on Tuesday.
Cost Cuts
The bank said it was making «very good progress» with the planned cost reductions and now expects to save 57 million francs by cutting 254 jobs this year.
The number of full-time equivalent jobs was 2,056 at the end of June, compared with 2,103 a year earlier. EFG wants to push that number down to 1,990 by year-end, which would be equal to a decline of 7 percent compared with the end of 2015 and 9 percent from its record in September 2015.
Capital Base
EFG had a cost-income ratio of 86.9 percent in the first half, compared with 83.3 percent a year ago and 89.1 percent at year-end.
The BIS capital ratio (Basel III) was 22.8 percent, compared with 17.8 percent a year ago and 16.8 percent at year end. The CET 1 capital ratio was 18.5 percent, compared with 13.9 percent a year ago and 12.8 percent at year end.
