Asia-Pacific And Latin America Expansion Will Create Private Banking Value

Key Takeaways

• Strong international asset growth, platform expansion, and acquisitions position EFG to capture rising global wealth and benefit from new client segments.
  
• Digital transformation, operational efficiency, and robust compliance capabilities drive improved margins and greater resilience amid changing industry dynamics.
  
• Heavy currency exposure, lower interest rates, rising costs, and challenges in scaling or integrating acquisitions could all pressure margins and slow future profitability growth.

Catalysts

Provides private banking, wealth management, and asset management services.

• EFG's sustained strong net new asset growth, particularly from high-growth regions like Asia-Pacific and Latin America, positions it to benefit from ongoing global wealth creation and rising numbers of high net worth individuals-supporting robust future revenue growth and recurring fee income.
  
• The acceleration in intergenerational wealth transfer and increasing international mobility among wealthy clients create new demand for cross-border, multi-jurisdictional wealth management-an area where EFG's international platform and high-touch private banking model should drive further expansion of its client base and assets under management, boosting future revenue streams.
  
• Continued investments in digital transformation and operational simplification are expected to further enhance efficiency, resulting in additional cost savings from the CHF 66 million program (with full run-rate benefits realized in 2026), likely supporting improvements in net margins and future earnings growth.
  
• Recent and pending acquisitions, such as Cite Gestion and ISG, bring scalable platforms with high mandate penetration, new product capabilities, and entry/expansion into attractive markets; together, these are set to drive revenue synergies, further scale benefits, and asset inflows, positively impacting both revenue growth and future profitability.
  
• Structural industry trends toward greater regulatory scrutiny favor well-capitalized, reputable players like EFG, which can absorb compliance costs and potentially increase market share as smaller competitors exit-contributing to improved operating leverage and supporting steady earnings growth.

EFG International Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming EFG International's revenue will grow by 5.1% annually over the next 3 years.
• Analysts assume that profit margins will increase from 20.2% today to 22.3% in 3 years time.
• Analysts expect earnings to reach CHF 387.2 million (and earnings per share of CHF 1.24) by about July 2028, up from CHF 301.7 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 14.6x on those 2028 earnings, down from 16.5x today. This future PE is lower than the current PE for the GB Capital Markets industry at 16.0x.
• Analysts expect the number of shares outstanding to decline by 1.01% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.55%, as per the Simply Wall St company report.

EFG International Future Earnings Per Share Growth

Risks

• EFG International remains highly exposed to currency risk, particularly the structural weakness of the U.S. dollar, given that nearly half of its assets under management, but only a quarter of its costs, are dollar-linked-sustained dollar depreciation could materially impact reported revenues and net profit.
  
• Sustained declines in global interest rates are expected to negatively impact net interest income, as management estimates each 100 basis point cut in U.S. rates could reduce annual revenues by CHF 15–20 million-this creates headwinds for future earnings growth in a lower rate environment.
  
• Despite recent improvements, operating leverage is partially driven by cost discipline programmes that are said to "print fully" in future periods (2026), potentially masking underlying cost pressures today; if personnel or litigation costs rise unexpectedly, the cost-to-income ratio target may be at risk-challenging long-term margin expansion.
  
• Ongoing growth in net new assets has relied more heavily on new client relationship officers (CROs), while average AUM per CRO has decreased due to currency effects; if hiring or retaining top CROs becomes harder, or if CRO productivity does not improve, future revenue and profitability growth could slow.
  
• Strategic ambitions hinge on M&A and international expansion (e.g. Cite Gestion, ISG), but cultural integration, realization of synergies, and effective scaling are not guaranteed-failure to execute or overpayment could erode returns and ultimately harm earnings and shareholder value.

Valuation

• The analysts have a consensus price target of CHF16.15 for EFG International based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be CHF1.7 billion, earnings will come to CHF387.2 million, and it would be trading on a PE ratio of 14.6x, assuming you use a discount rate of 6.5%.
  
• Given the current share price of CHF16.64, the analyst price target of CHF16.15 is 3.0% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.