July 25, 2018 / 6:59 AM / a year ago

UPDATE 1-EFG International net new money turns positive

(Adds details, background)

By John Revill

ZURICH, July 25 (Reuters) - EFG International reported a 27 percent fall in first-half net profit on Wednesday on lower returns from its life insurance holdings but the Swiss money manager achieved a net inflow of assets for first time since buying troubled bank BSI in 2016.

Net profit fell to 46.4 million Swiss francs ($46.72 million) from 63.6 million a year earlier, it said, noting its life insurance portfolio had lower-than-anticipated maturities.

Overall net asset inflows of 2 billion francs, beating the 1.38 billion expected by analysts in a Reuters poll.

That meant that for the first time since the start of the integration process of BSI, EFG achieved overall positive net new assets over a six-month period, the bank said.

The wealth manager took in 3.3 billion francs in new assets from clients, it said, offsetting 1.3 billion francs in withdrawals by clients in the wake of the purchase of BSI, which faced high-profile sanctions in Switzerland and Singapore over business ties to scandal-hit Malaysian government fund 1MDB.

The underlying increase of 3.3 billion francs reflected an annual growth rate of 4.6 percent, in line with EFG’s annualised target range of 3 to 6 percent.

EFG increased assets under management to 142.7 billion francs from 142 billion at the end of 2017.

EFG agreed to buy BSI from Brazil’s BTG Pactual in February 2016 to nearly double in size.

But Lugano-based BSI has been mired in legal problems, chiefly related to transactions linked to 1MDB, which resulted in the closure of BSI’s Singapore branch in 2016 and Swiss regulators ordering the bank be dissolved following its integration into EFG.

EFG’s wealthy customers withdrew 8.2 billion francs from the Zurich-based bank in 2017, although that has slowed in 2018, EFG said.

“While 2017 was a transformational year for EFG with the completion of the BSI integration, in 2018 EFG is continuing to transform the bank to build a stronger, more robust and sustainable business,” EFG said.

EFG had 613 client relationship managers in June, down from 644 at the end of 2017 despite hiring 19 new advisers. ($1 = 0.9931 Swiss francs) (Reporting by John Revill; editing by John Miller and Jason Neely)

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