Late-2016 pick-up sees Julius Baer hit asset gathering goal

[ZURICH] An end-of-the-year pick-up in asset gathering helped Julius Baer hit its target for taking in new client money, the Swiss private bank said in full-year 2016 results on Wednesday.

Switzerland's third-biggest private bank said it brought in 12 billion Swiss francs (US$12.1 billion) in net new money in 2016, a growth rate of 4 per cent and at the bottom end of its 4-6 percent medium-term target range.

In November, the bank had said net new money, seen as an important indicator of future earnings in private banking, was"close to" 4 per cent.

Aside from some smaller deals, Baer in 2016 focused on hiring relationship managers (RMs), or private bankers, from peers to attract new clients.

The bank brought in a net 116 RMs last year, though there is a typical lag of around 18 months for a new private banker to break even. "We will now go back to a more normalised hiring mode of approximately 80 relationship managers per annum," Chief Executive Boris Collardi said in a call with reporters. "With this number we expect to be well within our target net new money range in the years to come." Overall, assets under management rose to 336 billion francs. Baer said it saw "solid" net inflows from Asia, the Middle East and western Europe, which helped make up for withdrawals in Latin America and central and eastern Europe due to tax amnesty programmes.

A strain for many private banks has been lower activity by risk-adverse clients, something which Baer said had weighed on its gross margin in 2016.

However, the bank said net commission and fee income improved in the second half of the year.

The Zurich-based bank posted 2016 adjusted net profit of 705.5 million francs, ahead of the average estimate for 679 million in a Reuters poll.

Net profit under IFRS accounting standards was 619 million francs, up 411 percent on 2015 when the bank's bottom line was hit by provisions for penalties in a U.S. probe into tax evasion by American clients.

The bank said it would propose a dividend of 1.20 francs per share, compared to 1.10 francs last year.

Shares were seen opening up 1.4 per cent in premarket indicators.

REUTERS