EFG International has launched into the new fiscal year with momentum. The Zurich-based private bank reported on Tuesday a profit of 110 million Swiss francs for the first four months of the year, compared to 90 million francs in the first three months of the previous year, or 303.2 million francs for the entire 2023.

Beyond Expectations

The bank's profitability is at least as high as last year, while growth has exceeded its own targets. According to Tuesday's reports, net new funds amounted to 3.6 billion francs. This corresponds to an annualized growth rate of 7.6 percent, significantly higher than the 4 to 6 percent EFG currently aims for.

The bank highlighted the strong contribution of the new client advisors – known at EFG as Client Relationship Officers (CRO) – who were recruited in 2023. In the first quarter, the bank globally hired an additional 26 new CROs. By the end of April, a total of 718 CROs were active at the client front.

EFG aims to recruit 50 to 70 new CROs per year, but in 2023, over 100 client advisors joined the company.

Double-Digit Increase in Assets

Not only the new funds but also favorable currency effects and the stock market environment contributed to increased volumes at EFG. Managed assets rose by 11 percent compared to the end of 2023, reaching 157.5 billion francs by the end of April.

Despite the recruitment drive, the private bankers kept costs under control, reflecting once again the frugal management style of CEO Giorgio Pradelli. By 2025, he aims to achieve annual cost savings of 60 million francs compared to the 2021 level. Thanks to strong earnings, the crucial cost-to-income ratio (CIR) improved to 72.5 percent, compared to 73.3 percent for the whole of 2023.

The only downside was the profit margin, which deteriorated from 99 basis points at the end of the year to 96 basis points due to a declining contribution from the interest business.

Well-Positioned for Acquisitions

EFG remained tight-lipped about the acquisition speculations that have been circulating in recent days. Finews.ch reported that last February, the bank had secretly made a merger offer to its Zurich competitor Julius Baer. Apparently, the talks ended without result.

However, it is now evident that EFG is growing faster in 2024 compared to Julius Baer and has further strengthened its own capital position – the bank is thus well-positioned for acquisitions.

For a future EFG-Julius Baer merger, this could mean: postponed but not abandoned.

more to follow...