Julius Baer posts weaker than expected asset gain on Swiss crisis

JULIUS Baer Group posted a weaker boost to business than some analysts had expected amid the turmoil at rival Credit Suisse Group, reporting a 1 per cent gain in assets under management for the first four months of the year.

The Zurich-based bank reported net new money of 3.5 billion Swiss francs (S$5.2 billion) by the end of April, with assets under management at 429 billion francs, the bank said in a statement on Tuesday (May 23). The slight increase was partly offset by a negative currency impact, mainly from the strengthening of the Swiss franc against the US dollar, it said.

The bank said about 40 relationship managers had been brought on in the first four months. Credit Suisse has seen an exodus of staff in recent months and further job cuts are ahead, handing competitors an opportunity to build out their own teams. 

While the “hiring of relationship managers should help over the medium term, we believe short-term expectations were higher”, analysts at JPMorgan Chase including Kian Abouhossein wrote in a note. Julius Baer “was seen by the market as a winner from the Credit Suisse turmoil, which is not evident in these results”.

Julius Baer shares fell as much as 8 per cent after the start of trading in Zurich, trading at 58 Swiss francs at 9.26 am. 

Key figures for the first four months:

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• Cost-to-income ratio 66 per cent, compared with a target of more than 64 per cent by 2025
• The group’s BIS CET1 capital ratio improved to 15 per cent

The gross margin, a key measure of profitability, saw a slight drop at 92 basis points, compared to below the close-to-93 basis points achieved in the second half of 2022.

Last month, the bank said it completed a buy-back programme which aimed to repurchase up to 400 million Swiss francs of its shares. 

“The first four months of 2023 provided a challenging backdrop for wealth managers, with uncertainties in particular areas of the banking sector toward the end of the period,” the bank said. BLOOMBERG