Julius Baer shares under pressure: Julius Baer increases provisions for loans

Julius Baer startled investors with its interim report on business developments after ten months. The stock fell after loan impairments. The bank had written down value adjustments totaling 82 million francs on the loan portfolio by November 19th, as Julius Baer announced on Monday. A total of 70 million of them were created in November alone.

The asset manager did not want to reveal which loans were responsible for the value adjustments. No statements would be made about individual customer relationships, said a spokesman when asked by the AWP news agency. However, analysts assume that it is the SIGNA Group of investor René Benko. There had already been speculation in the media that a collapse of Signa would also have unpleasant consequences for Julius Baer.

The Austrian and his companies have outstanding loans of “well over half a billion” at the bank, reported the financial blog “Inside Paradeplatz”, citing insiders. Bär financed the purchase of the Globus Group by Benko and his Thai partners four years ago.

Meanwhile, Julius Baer emphasized that the quality of the loan book remains unaffected by the value adjustments. And the bank, with strong capitalization and high liquidity, has sufficient capacity “to absorb any risks arising from the group’s business activities.”

The market is nevertheless worried: While the extent is manageable and tradable, the more fundamental question of risk management at Julius Baer remains unavoidable, say analysts at Jefferies. On the Swiss stock exchange, Julius Baer shares lost 10.39 percent to 49.92 Swiss francs, marking a new low for the year.

The asset manager now expects a lower profit for the end of 2023. In 2022, the bank earned 950 million francs. In the first half of the year, profit of 532 million was 20 percent higher than in the same period last year.

Julius Baer’s assets under management fell to 435 billion francs at the end of October 2023, after reaching 441 billion at the end of June. However, for the entire first ten months of the year, assets rose 3 percent.

The bank attributes this increase primarily to continued net inflows of new money and an overall positive development on the global stock markets. However, this was partly offset by the negative currency effect: the Swiss franc has appreciated against most major currencies since the beginning of the year.

New money inflows have amounted to a net 10.3 billion francs since the beginning of 2023. Analysts had expected more inflows in the four months of July to October, after 7.1 billion in the first half of the year. The gross margin also fell significantly compared to the first half of the year. At the same time, costs relative to revenue also increased over the ten months.

Zurich (Reuters)/

ZURICH (dpa-AFX)

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