Zurich-based wealth manager Julius Baer saw its assets under management increase with some help from Credit Suisse. It also hired more relationship managers with more in the pipeline.
Julius Baer reported a net profit attributable to shareholders of 532 million Swiss francs ($614.1 million) for the first half of the year, an 18 percent increase from a year ago while operating income was up 9 percent with higher interest rates offsetting a decline in commission and fee income, according to mid-year results released Monday.
«A complex environment has not hindered us from achieving a strong start to the current strategy cycle – on the contrary, it has even allowed for a tactical acceleration of our push for scale in our key markets,» said CEO Philipp Rickenbacher.
Increased Assets under Management
Favorable stock and bond markets helped boost assets under management by 17 billion francs to 441 billion, an increase of 4 percent. The result was tempered somewhat by negative currency impacts as the franc appreciated against the dollar and Euro.
Net new money was 7.1 billion during the first half, accelerating in the last two months of the second quarter, according to the report. The result was a welcome one compared to a year ago when Baer reported outflows of 1.1 billion. Clients continued to de-leverage in a reflection of current market conditions.
In an interview with «Bloomberg TV» (behind paywall) Rickenbacher said, «We have benefited from Credit-Suisse-UBS to some extent, but we’ve been able to generate new money from a much broader array of sources.»
Excluding that impact, net new money amounted to 9.2 billion.
More Relationship Managers
The increase in AuM was no doubt helped by the hiring of an additional 57 full-time relationship managers (RM) this year, bringing the total to 1,305, and the hiring pipeline for RMs «remains healthy.»
Personnel expenses were up 5 percent to 881 million due to a rise in performance-related remuneration and an increase in the monthly average of employees.
Regional AuM Growth
The contributions to the growth of new money inflows were «solid» in Switzerland and Europe, along with Asia, particularly from Hong Kong and India, and in Israel and the Middle East.
Earlier this year, Julius Baer chairman Romeo Lacher said that by 2030 the firm could «absolutely» manage a volume of one trillion Swiss francs in client assets. Rickenbacher also spoke on the topic earlier this month, saying «We have deliberately never formulated that as a target with a fixed time frame. But we are in growth mode and such ambitions are not unrealistic.»
Clients Redirecting Money
With major central banks having exited years of accommodative monetary policy by raising interest rates, financial institutions are benefitting. Julius Baer reported a 36 percent increase in net interest income to 464 million francs.
It said the rise in interest income was partly offset by a «significant increase» in the cost of deposits. This came as «clients increasingly redirected their cash positions from current accounts to time and call deposits at higher interest rates.»
Improved Capital Ratio
Julius Baer's BIS CET1 capital ratio improved to 15.5 percent from 14 percent at the end of last year, and the BIS total capital ratio stood at 24.7 percent compared to 21.7 percent at the end of 2022.
As the leverage exposure fell 4 percent to 102 billion, with the tier 1 leverage ratio improving to 5.1 percent from 4.3 percent.
