Julius Baer posts lower half-year profit
Published: Thursday, Jul 25th 2024, 07:40
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The private bank Julius Baer has suffered a decline in profits in the first half of the year. Following the ongoing negative headlines last winter surrounding the Signa debacle, the inflow of new money to the Zurich-based private bank was also down on the previous year.
Net profit fell by 15 percent year-on-year to CHF 452 million, as Julius Baer announced on Thursday. Adjusted for integration and restructuring costs, the half-year profit of CHF 460 million was 15 percent below the previous year's result.
Customer assets increased
Assets under management (AuM) amounted to CHF 474 billion at the end of June compared to CHF 471 billion at the end of April. Compared to the end of 2023, assets under management have thus risen by 11%. This was supported by positive developments on the financial markets and more favorable exchange rate conditions.
Net new money inflow in the first half of the year amounted to CHF 3.7 billion, after the bank had reported an inflow of CHF 7.1 billion a year ago. After a negative start in January, net new money recovered significantly in the following months, Julius Baer writes.
Progress with private debt portfolio
Julius Baer had been in the headlines for months from November 2023 due to high loans to the now insolvent Signa Group of Austrian investor René Benko. Following a major write-down of over CHF 600 million, the then CEO Philipp Rickenbacher resigned at the beginning of February 2024. On Tuesday, the bank presented a new boss in the form of current Goldman Sachs banker Stefan Bollinger.
The wind-up of the private debt loan book, which included the Signa loans, is progressing as planned, according to the statement. At the end of June 2024, the nominal value of the loan book amounted to 0.6 billion compared to 0.8 billion at the end of 2023. The wind-up should be largely completed by the end of 2026.
Lower gross margin
At CHF 1.95 billion (-4%), operating income was down on the previous year. Income in the interest business declined as interest rates fell again. In contrast, the bank was able to increase its commission and services business.
Meanwhile, the bank earned less on assets under management than in the previous year: the gross margin amounted to 85 basis points after 93 basis points in the same semester of the previous year. Cost efficiency also deteriorated.
The cost/income ratio was still 71 percent compared to 65 percent in the same period last year. The bank now wants to accelerate its savings program and is increasing the savings targets to CHF 130 million from the previous CHF 120 million.
Julius Baer was unable to meet analysts' profit expectations with its annual figures. On the other hand, net new assets and assets under management were slightly above average expectations.
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