UPDATE 1-EFG revamp boosts margins, sending shares higher

Wed Feb 27, 2013 6:02am EST

Related Topics

* Assets under management rise to 78.7 billion Sfr

* Margin rises to 105 basis points from 94 bp

* Bank proposes unchanged dividend of 0.10 Sfr (Adds analyst, shares, background)

ZURICH, Feb 26 (Reuters) - Private bank EFG International swung to a net profit in 2012 as margins improved after it shut unprofitable businesses and slashed the number of its private bankers, sending shares sharply higher.

The mid-sized wealth manager reported a profit of 111 million Swiss francs ($119.2 million) in 2012, compared with a 294 million franc loss a year earlier.

"All loss-making businesses have been exited, with the number of locations reduced by 20," the Zurich-based bank said in a statement.

EFG's gross margin jumped to 105 basis points from 94 basis points a year earlier, while the bank's BIS capital ratio - a measure of financial strength - rose to 18.1 percent from 12.9 percent.

"The impressive increase in EFG's core capital should be the biggest driver of share price gains," said Berenberg analyst Eleni Papoula in a note.

"Over the past year, EFG has exited 20 out of 50 locations, reduced its total headcount by 14 percent and has almost tripled its tangible book value."

The sharp rise in book value was largely due to the bank buying back preferential shares, which were senior to normal shares and so weighed on the ratio.

Shares jumped 9.7 percent to 12.40 francs, outperforming peer Vontobel and larger rival Julius Baer, which were respectively slightly higher and flat.

Last year, EFG sold its fund administration unit to Credit Agricole's CAECIS, and EFG Bank Denmark to SEB Wealth Management, as well as listing its structured products business.

EFG slashed the number of its private bankers to 477 from 675 two years ago.

The bank's assets under management rose to 78.7 billion francs at year-end as 3 billion francs of new assets in continuing businesses offset funds lost from units sold or closed.

Assets stood at 76.5 billion at the end of June, when EFG said its restructuring process was largely complete. The bank said it would propose an ordinary dividend of 0.10 Swiss francs per share, unchanged from 2011.

The wealth manager faces competition at home from rivals Vontobel and Sarasin, now owned by Brazilian-Swiss bank Safra. ($1 = 0.9315 Swiss francs) (Reporting by Martin de Sa'Pinto; Editing by Louise Heavens and Helen Massy-Beresford)

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