UPDATE 4-EFG shares dive after earnings, dividend miss

* Net profit down 33 percent

* Will not meet 2010 targets

* Still interested in major acquisition

* Dividend cut to 0.25 Sfr/shr from 0.35

* Shares down 32 pct after touching all-time low

(Adds interview with CEO, updates shares)

By Lisa Jucca and Martin de Sa’Pinto

ZURICH, Feb 25 (Reuters) - Shares in EFG International AG EFGN.S tumbled over 30 percent to a record low on Wednesday after the Swiss private bank missed 2008 earnings forecasts, cut its dividend and ditched its 2010 targets.

EFG reported a worse-than-expected 33 percent fall in net profit to 221.9 million Swiss francs ($192 million) and said market conditions remained challenging.

Analysts polled by Reuters had on average forecast a profit of 313 million francs. [[ID:nLK548440]

EFG said exceptional economic conditions in 2008 slowed its progress and “will continue to constrain growth during the current year”. It also said the change in market conditions made its 2010 targets, set in 2007, unattainable.

The targets included attributable net profit of between 800 million and 900 million francs. The bank did not set new targets on Wednesday, saying market conditions had not yet stabilised.

The shares were down 32 percent at 8.00 francs by 1445 GMT after earlier hitting an all-time low of 7.80. The DJ Stoxx European banking sector index .SX7P was up 2.1 percent.

Including Wednesday’s fall, the stock has lost nearly 60 percent of its value since the start of the year.

EFG shares have been under pressure in recent days along with other Swiss financial stocks amid concerns a U.S. tax probe into UBS UBSN.VXUBS.N would weaken Swiss banking secrecy laws and severely und

“EFG International’s profits were below expectations, even after adjusting for writedowns of 59 million Swiss francs on its portfolio of life insurance contracts,” Helvea analyst Peter Thorne said in a note.

The company said net profit was 280.9 million francs if adjusted for non-recurring items, principally relating to adjustments to the value of life settlement policies.

EFG cut its dividend to 0.25 francs a share from 0.35 francs for 2007, below a forecast of 0.34 francs.


Despite the below-par earnings report, EFG said it was still interested in making a major acquisition, possibly in 2009 or 2010.

“We are looking at 10 to 20 different opportunities. There is a great range of possibilities out there,” Chief Executive Lonnie Howell told Reuters in an interview.

“We would be looking at institutions that would have to a certain extent at least global characteristics.”

The bank has mainly grown through acquisitions. Chief Financial Officer Rudy van den Steen said it would look with interest at the private banking arm of lenders such as Royal Bank of Scotland RBS.L or Fortis FOR.BR if they were to become available and if they looked a good fit.

EFG, which said in December its private banking clients had about $130 million of exposure to the companies of Bernard Madoff, said it did not expect any impact from the alleged $50 billion fraud “in 2009 or in future years”.

The bank said client assets under management had shrunk to 77.2 billion francs from 98.3 billion, hit by market turmoil and currency effects, but it still had net new assets coming in.

Howell said the domestic money was not coming from UBS, which has been hit in Switzerland by massive outflows after it took billions of dollars writedowns on risky U.S. assets.

“Most of the money leaving UBS in Switzerland would have gone to local banks like the cantonal banks and to some extent Credit Suisse, less to us,” he said.

“But we have seen inflows around the world, from a whole array of banks, including UBS.”

The bank reiterated on Wednesday it had a strong balance sheet and excellent liquidity.

Its Tier 1 capital ratio stood at 13.2 percent at end-2008, up from 11.3 percent at the end of June but down from 14.6 percent at end-2007. (Additional reporting by Jason Rhodes and Pascal Schmuck; Editing by Greg Mahlich, John Stonestreet) ($1=1.155 Swiss francs)