Citi cuts EFG to 'neutral', says current value more than fair

EFG International AG

11/08/2023 10:16

** Citi downgrades Swiss bank EFG International  EFGN.S  to
"neutral" from "buy", citing spiralling costs and recent stock
gains
    ** The broker says EFG has overperformed compared to peers
over the last three months, with its stock gaining over 30% in
value, and now trading well above closest peer Julius Baer
 BAER.S  
    ** Citi expects the bank to report a net new asset growth of
over 6.5% between the second half of 2023 and 2024 supported by
new hires bringing in new assets
    ** It does not expect EFG's operating leverage to follow the
trendline of its strong growth, given rising wage costs
    ** "However, with the shares now trading at almost 2x
premium to closest peer BAER, which we see as a higher-quality
play on wealth management growth; we think valuation looks fair
and see better value elsewhere," it writes
    ** The stock is down 3.9% as of 0910 GMT, and up around 18%
year-to-date
    

 (Reporting by Louis van Boxel-Woolf)
 ((louis.vanboxel-woolf@thomsonreuters.com))