Julius Baer sees profitability rise on client trading, cost cuts

[ZURICH] Swiss wealth manager Julius Baer on Monday flagged an improvement in profitability for the first nine months of 2020 as client activity increased and it cut costs, while rising client inflows helped the bank grow net new money by nearly 4 per cent.

"Julius Baer's strong performance in the first half of 2020 continued in the third quarter of 2020," Switzerland's third-largest listed lender said in a statement. "Supported by ongoing active client engagement, operating income was considerably higher in the first nine months of 2020 than in the same period a year ago."

Fresh client inflows and a continued recovery in stock markets helped the Zurich-based lender stem a fall in managed assets unleashed by the coronavirus pandemic, with assets under management rising 3 per cent to 413 billion Swiss francs (S$612.80 billion) since June.

Shares were indicated up 2.1 per cent in pre-market trading activity.

The bank - which does not report profits in its nine-month results - had previously seen a 43 per cent jump in half-year net profit to 491 million Swiss francs, as a pick up in client activity more than offset a drop in lending and a hit from falling US interest rates.

On Monday it said gross margins in the third quarter had remained consistent with levels seen during May and June, helped by high levels of client activity despite slower loan growth.

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Its adjusted cost-income ratio stood at 66.1 per cent through September, an improvement from the 71.1 per cent posted for full-year 2019.

The bank said it would take another 177 million euro (S$281.5 million) goodwill charge from its ailing Italian unit Kairos in its full-year results, and would be making a number of investment managers minority shareholders of the Italian asset and wealth manager. Julius Baer will retain a 70 per cent stake.

REUTERS