EFG International Posts Record Results, Maps Growth Path

EFG International ((EFGXY)) has held its Q4 earnings call. Read on for the main highlights of the call.

EFG International’s latest earnings call painted an upbeat picture, with management stressing record assets under management, record IFRS net profit and earnings per share, and double‑digit growth in revenues and operating profit. While legacy litigation, softer life insurance income and currency effects still cloud the outlook, executives argued that strong capital generation and cost discipline more than offset these headwinds.

Record AUM and Surge in Net New Assets

EFG’s assets under management climbed to a record CHF 185.0 billion, around 12% higher than the prior year’s CHF 165.5 billion, underscoring the franchise’s growing appeal. Net new assets reached CHF 11.3 billion, up 6.8% year on year and the highest nominal inflow since the global financial crisis, with momentum improving further in the fourth quarter.

Revenues and Operating Profit Hit New Highs

Operating performance reached roughly CHF 493 million, a robust 26% increase from a year earlier as the bank benefited from higher volumes and stronger client activity. Total revenues rose 11% for the year, or 8% when stripping out exceptionals, while core private banking operating profit advanced 18% to CHF 425 million.

Record Net Profit, Earnings and Returns

IFRS net profit came in at a record CHF 325 million, or CHF 339 million excluding exceptional items, representing a 6% year‑on‑year increase on an underlying basis. Earnings per share hit an all‑time high of CHF 1.03 and return on tangible equity climbed above 18%, underlining the improved profitability of the business.

Revenue Margin Resilience and Commission Strength

The group’s revenue margin showed resilience, improving to 98 basis points for the full year compared with 96 basis points previously, with a second‑half run‑rate around 93 basis points. Higher‑quality commission income grew 17%, supported by expanding commission margins and a rise in mandate penetration to 67%, at the upper end of the stated 65–70% target range.

Cost Discipline and Efficiency Programmes

EFG continued to tighten its cost base, lowering the headline cost‑to‑income ratio to about 69.8%, a sharp improvement from roughly 84% in 2019. Operating expenses rose only 3.7% on a like‑for‑like basis, or 6% including acquisitions, while full‑time equivalents fell from 3,114 to 3,037 and the Simplicity programme delivered CHF 66 million of savings, above its original target.

Capital Strength, Liquidity and Shareholder Payouts

The bank ended the year with a reported CET1 ratio of 14%, or about 14.4% pro forma after allowing for a Tier 1 instrument unwind, comfortably within its capital corridor. Liquidity also remained strong with a liquidity coverage ratio of around 270% and liquid assets above CHF 18 billion, supporting a proposed record dividend of CHF 0.65 per share and continued share buybacks.

M&A as a Growth Accelerator

Management highlighted that recent acquisitions are supplementing organic growth, with three deals over 12 months adding about CHF 16 billion of AUM. Two transactions already included in the 2025 figures contributed roughly CHF 12 billion, equivalent to around a full year of net new assets, while the Quilvest deal is expected to add another CHF 4 billion and deepen key strategic markets.

Commercial Execution and CRO Productivity

Client‑relationship officer headcount stood at 763, with 79 bankers hired or signed during 2025, demonstrating ongoing investment in front‑line talent. On a comparable basis, assets per CRO rose to around CHF 363 million, with net new assets once again skewed towards new hires, who generated about 65% of inflows versus 35% from existing bankers.

Derisking the Legacy Insurance Book

EFG has continued to shrink its legacy life insurance portfolio, cutting its carrying value to around CHF 260 million from CHF 360 million a year earlier and more than CHF 500 million at the start of the derisking cycle. Management stressed that while this reduces anticipated future earnings from the book, it also lowers risk and future volatility tied to these older exposures.

Legacy Litigation and Provisions

The group booked a CHF 59 million litigation provision in the second half for a case dating back 15–20 years, partially offset by a CHF 45 million insurance recovery recorded in the first half. The net effect was a CHF 14 million drag on reported profit, and management acknowledged that an ongoing U.K. trial still represents a source of legal uncertainty until a verdict is reached.

Muted Life Insurance Contribution

Profit contribution from the life insurance segment was materially lower than the CHF 32 million recorded in 2024 as the bank continued to run down and derisk this area. Executives signalled that investors should expect subdued and somewhat volatile earnings from life insurance going forward, given the shrinking book and the focus on simplifying the balance sheet.

FX and Interest‑Rate Headwinds

A weaker U.S. dollar and falling interest rates dented 2025 results and were flagged as potential headwinds into 2026, especially via lower net interest income and translation effects on capital ratios. The bank quantified that a uniform 100‑basis‑point drop in rates across major currencies would cut revenues by about CHF 36 million, though the near‑term margin impact was described as modest.

Acquisition Drag and Integration Costs

Recent acquisitions had a small negative impact on the 2025 profit and loss account because of deal‑related expenses and only partial‑year consolidation of earnings. These transactions also reduced the CET1 ratio by roughly 130 basis points, but management expects that as integration progresses and synergies are realised, the deals will become accretive from 2026 onwards.

Persistent Legal and Litigation Expenses

Beyond specific provisions, EFG continues to incur ongoing legal and litigation costs tied to older cases, which management conceded remain an unwelcome source of profit volatility. While the bank is gradually resolving these issues, they are still a visible line item in the cost base and are likely to linger until all legacy matters are fully closed.

Guidance and Outlook for 2026–28

Looking ahead, EFG is targeting annual net new asset growth of 4–6%, a revenue margin above 85 basis points, a cost‑to‑income ratio around 68% and a return on tangible equity of 20% over 2026–28. Management also aspires to roughly 15% annual net profit growth, backed by further efficiency gains, disciplined CRO hiring, high mandate penetration and a strong capital and liquidity position.

EFG International’s earnings call underscored a business with strengthening core profitability, rising client volumes and sizeable capital and liquidity buffers, even as legacy issues and macro headwinds persist. For investors, the combination of record results, clear financial targets and growing shareholder payouts suggests a confident management team betting on sustained growth in the coming years.