At CHF 451 million, consolidated profit was 25 percent below the record result achieved in the previous year, as the asset management bank announced on Monday. Half-year profit adjusted for integration and restructuring costs fell by 26 percent and reached CHF 476 million.
The bank now wants to further accelerate cost discipline throughout the group, announced CEO Philipp Rickenbacher in the report. In addition, efforts to “create added value for customers” will be further accelerated and more customer advisors will be hired.
wealth declining
Assets under management (AuM) were CHF 428 billion at the end of June, compared to CHF 457 billion at the end of April. Compared to the end of 2021, assets under management have decreased by 11 percent.
The decline in customer assets is mainly due to the corrections on the financial markets. The private bank also had to report a net new money outflow of CHF 1.1 billion. However, net new money has recently recovered after the outflows in the first four months. The bank now expects net new money to continue to normalize in the second half of the year.
margin decreased
At CHF 1.87 billion (-6%), operating income was also well below the previous year’s figure. In the commission and service business in particular, the bank felt a clear decline, while in the interest business it was able to benefit from the interest rate hikes in the USA. Julius Baer again earned less on the assets under management than in the previous year: the gross margin amounted to 81 basis points after a high 87 basis points in the same period of the previous year.
With the annual figures presented, Julius Baer has remained below analysts’ expectations in terms of profit and gross margin. Despite a somewhat better trend in new money, customer assets also fell more sharply than the experts had anticipated.
Julius Baer shares fall after half-year figures
Julius Baer shares start trading on Monday with clear discounts. With the half-year results presented in the morning, the asset manager failed to meet market expectations both in terms of profit figures and assets under management. However, the improvement in new money inflows at the end of the semester is viewed positively.
Julius Bär’s shares can work their way into the profit zone and are temporarily listed on the SIX up 0.90 percent at CHF 45.76, after the title had fallen to CHF 43.10 shortly after opening. The market as a whole is meanwhile also lighter with a decline of 0.1 percent.
Not only were the earnings lower than expected, but at the same time the costs were higher than estimated, writes Vontobel analyst Andreas Venditti in a comment. Apparently, revenue continued to depend heavily on customer transactions, he notes. The fact that the bank has imposed a hiring freeze on non-client advisors suggests the group expects client activity to recover quickly.
ZKB expert Michael Klien attributes the higher business expenses not least to increased travel expenses in connection with customer events and IT-related expenses. At 15.0 percent, the group’s CET1 capital ratio is now close to the group’s lower limit, emphasizes the analyst at the cantonal bank.
According to UBS, the capital ratio, which has fallen more than expected, should also weigh on the share price. On the other hand, the outflow of new money was not as bad as feared, the big bank wrote in a first comment. It is also positive that new money has recovered in the last two months of the semester after the outflows in the first four months, and the bank expects further normalization for the second half of the year.
For analyst Anke Reingen from the Canadian RBC, the result was mixed. She refers, for example, to the decline in margins and “worsened cost control”. In the meantime, despite strong interest income, earnings overall fell short of expectations. However, she rates the low loan losses as positive, as does the net new money, which has recently turned positive again.
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Zurich (awp)