UPDATE 3-EFG H1 profit falls after charges, shares drop

* H1 net profit 20 mln Sfr vs 47 mln Sfr in Reuters poll

* One-off charges bite, net new money shrinks

* Says optimistic for H2 after improved May/June

* Says not currently considering acquisitions

* Shares down 3.6 pct

(Adds quotes from CFO, updates shares)

By Martin de Sa'Pinto

ZURICH, July 28 (Reuters) - Net profit at EFG International (EFGN.S) tumbled in the first half of the year, falling well below expectations after the bank had to write down assets at a hedge fund unit and on its life insurance portfolio. New client money shrank by more than three-quarters from a year earlier as 4.7 billion Swiss francs ($4.40 billion) of private client inflows were partially offset by institutional withdrawals of 2.5 billion francs.

The bank's first half net profit fell to 20 million Swiss francs, below the average forecast of 47 million francs in a Reuters poll.

"Results are frightening but partly anticipated, taking into account a substantial impact of one-off charges and a large discount on pre-results estimates," said analyst Mathias Bueeler at Kepler Capital Markets.

Shares were down 3.6 percent at 12.20 Swiss francs at 1144 GMT, underperforming the DJ Stoxx European banking index .SX7P which was down 1.12 percent.

Chief Executive Lonnie Howell said on Tuesday it had been a disappointing six months for the bank, but was optimistic for the rest of the year, following better business performance in May and June.

"Net new money inflows on the private client side were concentrated in these two months. Moreover, on the hedge fund side, outflows appear to have bottomed out and a new business pipeline is building up," EFG said in a statement.

The net income was hit by charges of 33 million Swiss francs relating to the amortisation of EFG's fund of hedge funds business, which had heavy first half outflows, and an adjustment to the accounting value of its life insurance portfolio.

Revenues also fell sharply from the year-earlier period and dropped slightly from the second half of 2009 mainly as a result in the fall in assets under management and the related fees.

EFG's results are in sharp contrast to earlier reports from larger Swiss competitors Julius Baer (BAER.VX) and Credit Suisse (CSGN.VX), where profits came in well ahead of analyst estimates. [ID:nLO376425] [ID:nLM402681]

A STRATEGIC RE-THINK

Last month, EFG warned that first-half results would be weak and said it would cut jobs and salaries as it sought to reduce costs but also said business momentum was encouraging towards the end of the period. [ID:nLT697108]

The company said on Tuesday it had raised the performance benchmark for its customer relationship officers (CROs), and while it continued to hire high quality CROs, their number had fallen since the end of the year, producing cost savings.

This contrasted with 2008 when the company hired almost 100 new CROs.

"We've been forced to rethink our entire business model over the past six months. The position at the end of 2008 was clearly sub-optimal," said Howell.

Assets under management dropped 17 percent to 80.4 billion francs from a year earlier, but were slightly up from the end of 2008. Tier 1 capital, a measure of a bank's financial strength, rose to 12.9 percent.

Van den Steen said share buybacks between February and April limited the rise in the Tier 1 ratio. The bank was not currently considering further buybacks, and may sell shares on an opportunistic basis.

He added that the bank is not currently looking for acquisitions as valuations seen in recent deals were too high, and preferred to focus on preserving capital. ($1=1.068 Swiss Franc) (editing by John Stonestreet and Hans Peters)