EFG Shares Sink as Kuwaiti Legal Dispute Dents Record Earnings

Shares of EFG International plummeted in Wednesday trading, hitting a low of 17.12 Swiss francs after a significant legal provision overshadowed the bank’s operational performance. The Zurich-based private lender set aside 59.5 million francs ($77.3 million) to cover a legacy lawsuit brought by Kuwait’s public pension fund. While the bank had previously disclosed the matter, the scale of the charge caught analysts off guard, leading to a substantial miss on bottom-line expectations.

The legal hit arrives at a time of otherwise record activity for the group. EFG reported a full-year net profit of 325.2 million francs for 2025, a marginal 1% increase over the previous year. This modest growth persisted despite record revenue of 1.67 billion francs, as litigation costs and rising operational expenses eroded the benefits of higher interest rates and increased fee income. A one-off 45.4 million-franc insurance recovery from a separate Taiwanese case provided a partial buffer but failed to stabilize the stock price.

Assets and Capital Position

Despite the earnings drag, the bank's core business showed momentum. Assets under management climbed 12% to 185.0 billion francs, bolstered by aggressive hiring of client relationship officers and recent acquisitions. Net new assets reached 11.3 billion francs, representing an annualized growth rate of 6.8%—comfortably exceeding the firm's upper target range.

However, the financial strain was evident in the bank’s common equity tier 1 (CET1) ratio, which dropped to 14% from 17.7% a year earlier. CFO Dimitris Politis attributed the decline to the legal provision and recent M&A activity, though he maintained that capital generation remains strong enough to support future acquisitions. EFG, controlled by the Latsis family, proposed a dividend of 0.65 franc per share and announced a buyback of up to 9 million shares by July 2027 to fund employee compensation.