Bernhard Holder's first year as CEO of Julius Baer wasn't fortuitous: the Swiss bank is heavily occupied with itself. Full-year results are a chance to change that.
2018 was meant to be Bernhard Hodler’s year – his first full one since becoming Julius Baer CEO 14 months ago. Instead, the private bank threatens to sink into a technocratic agenda after a major Latin American corruption scandal. The stock has shed more than one-third of its market capitalization since the scandal broke last summer.
Its chairman of seven years, Daniel Sauter, is exiting in April; the 58-year old Hodler is managing a crisis partly of his own making (he was Julius Baer’s risk boss for years). Besides profits, here are what investors will watch for from annual results on Monday, compiled by finews.com:
1. «Investor Case» – High and Dry
If a security loses nearly 40 percent of its value within the year, it's either a clear «buy» – or one to avoid at all costs. Julius Baer's stock is more complicated: the 129-year-old Zurich private bank stands proud in the Swiss industry. It should be snapped up as a bargain, but instead investors are dumping the stock in droves. This year, the stock has clawed back and risen nearly 20 percent – against a bull market. This is emblematic of Julius Baer's problem: the bank doesn't offer investors enough prospects, as this listicle illustrates. Julius Baer badly needs to present an «investor case» on Monday.
2. Spending Cuts
After Julius Baer sounded alarm in November, what has it done to cut its spending or juice up revenue since? We know from UBS that clients – especially in Asia – didn’t trade. Investors will be watching to see whether Julius Baer clients are taking to a beefed-up discretionary offering (at mid-year, the bank had just $64.6 billion of total assets $401.4 billion in lucrative mandates). The deeply unpopular alternative for Hodler is bonus cuts – or even quietly cutting staff. Julius Baer won’t meet its 68 percent cost-income ratio target in 2018, but Hodler owes some detail on how he wants to get back on track this year.
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