• Net New Assets (NNA): CHF10.1 billion, representing a growth rate of 7.1%.
• Profit: CHF322 million, a 6% increase compared to 2023.
• Pre-tax Profit Growth: 14% increase, indicating double-digit growth.
• Return on Tangible Equity: 18.6%, exceeding the 2025 target.
• Dividend per Share: CHF0.60, the highest ever, marking the fourth consecutive increase.
• Assets Under Management (AUM): CHF165.5 billion, a 16% increase from the previous year.
• Revenue Margin: 96 basis points, demonstrating resilience.
• Cost-to-Income Ratio: 72.9%, improved from the previous year.
• Earnings Per Share (EPS): CHF1 per share in 2024.
• Core Tier 1 Capital Ratio: 17.7%, a 70 basis points increase year-on-year.
• Liquidity Coverage Ratio (LCR): 242%, indicating strong liquidity.
• Commission Income: Increased by 14% year-on-year.
• Mandate Penetration: Increased from 56% to 62%.
• Operating Expenses: Increased by 5% due to strategic investments.
• Acquisition: CitA Gestion, managing CHF7.5 billion in assets.

• Warning! GuruFocus has detected 3 Warning Signs with FRA:TE5.

Release Date: February 19, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• EFG International AG (EFGIF) reported record profitability with a net profit of CHF 322 million, a 6% increase from the previous year.
• The company achieved a net new asset (NNA) inflow of CHF 10.1 billion, representing a growth rate of 7.1%, surpassing their target range of 4% to 6%.
• The return on tangible equity for 2024 was 18.6%, exceeding their target for 2025.
• EFG International AG (EFGIF) announced the highest dividend per share ever at CHF 0.60, marking the fourth consecutive dividend increase.
• The acquisition of CitA Gestion, a Geneva-based bank, is expected to strengthen EFG International AG (EFGIF)'s position in Switzerland, adding CHF 7.5 billion in assets under management.

Negative Points

• The cost-to-income ratio remains high at 72.9%, although it has improved slightly from the previous year.
• Operating expenses increased by 5% due to strategic investments and hiring in 2023, impacting profitability.
• The company faces challenges with interest-related income, which decreased by 13% year-on-year.
• EFG International AG (EFGIF) experienced significant outflows in its asset management division for the second consecutive year.
• The acquisition of CitA Gestion comes with a high cost-to-income ratio of 92%, which may require time to improve efficiency and profitability.

Q & A Highlights

Q: Can you provide more details on the Basel III final impact and the drivers behind the increase? A: The Basel III final impact is expected to be about 40 basis points, primarily due to changes in the trading book and equity side, where multipliers have increased. However, we benefit from reduced weighting in residential mortgages, which offsets some of the impact. Overall, our simple balance sheet means we don't face significant changes. - Dimitrios Politis, CFO & Deputy CEO

Q: What are the reasons behind the increase in expenses in the investment and wealth management segments? A: The increase in expenses is due to investments in delivery capabilities and procuring more external research services, which are costly. These investments are crucial for enhancing our advisory services to clients. - Dimitrios Politis, CFO & Deputy CEO

Q: EFG Asset Management has seen outflows for the second consecutive year. Is this structural, and what is the strategy moving forward? A: The outflows are partly due to fixed maturity products and AMCs reaching maturity and not being renewed. While there are short-term factors, we are assessing our strategy for funds to ensure long-term success. - Piergiorgio Pradelli, CEO

Q: How do you plan to achieve the ambitious cost-to-income ratio target of 69%? A: We have a strong track record of reducing the cost-to-income ratio by about 3% annually over the past five years. In 2025, we aim to streamline resources and leverage business growth to drive revenue, which will help us achieve the target. - Dimitrios Politis, CFO & Deputy CEO

Q: Can you provide insights into the lending trends across different currencies? A: The trend of deleveraging has stabilized, but we haven't seen significant releveraging yet. Lending growth is not matching NNA growth, and our penetration has decreased to 11%. We remain optimistic but cautious about future lending growth. - Piergiorgio Pradelli, CEO

Q: What is the rationale behind the CitA Gestion acquisition, and how does it fit into your strategy? A: The acquisition is a growth play aimed at enhancing NNA and business development. CitA Gestion has a strong growth engine and will benefit from our infrastructure, allowing them to grow at a lower marginal cost-to-income ratio. - Piergiorgio Pradelli, CEO

Q: How do you plan to improve EFG's brand recognition in international private banking? A: We aim to improve our brand by setting clear objectives and targets, increasing marketing and branding spend, and leveraging our strengths. We are already seeing positive trends in brand rankings and will continue to build on this momentum. - Piergiorgio Pradelli, CEO

Q: What are your expectations for net CRO growth in 2025, excluding CitA Gestion? A: We do not have a specific target for net CRO growth. Our guidance for gross CRO hiring is between 50 and 70 annually, focusing on quality over quantity. We aim for a 5% net growth, aligning with our NNA growth. - Piergiorgio Pradelli, CEO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.