The surge in stock market prices this year so far has boosted assets under management at Julius Baer. In some places, the bank faced headwinds however.
The Zurich-based private bank managed 427 billion Swiss francs ($426 billion) in assets at the end of April 2019, which translated into an increase of 12 percent since the beginning of the year. It is a new record, Julius Baer said on Friday.
The increase was mainly due to the surge in stock prices in the early parts of the year, certain currency effects and the consolidation of NSC Asesores in Mexico.
Headwinds at Kairos
Net new money increased an annualized 3 percent in the first four months, helped by relationship managers who joined in 2018. The bank deemed the rate of growth «satisfactory» – the target range is 4 to 6 percent.
The growth achieved in regions across Asia and Europe were partially offset by a net outflow at Kairos, where clients pulled out assets because of a decline in performance in 2018. Net new money was also affected by the departure of a number of clients following the ongoing client risk review project and outflows following a wider application of negative interest rates to large cash holdings.
Cost Cutting Program on Track
The bank's gross margin recovered in the early parts of the year, reaching a level of 82 basis points, compared with the 79.6 basis points in the second half of 2018. The cost-income-ratio dropped below 73 percent, from 74.3 percent in the second half of 2018.
The cost reduction program has started and is on track, the bank said. It entails a reduction of the headcount by 2 percent by the end of the year. The resulting cost saving will start materializing in the financial results for the second half 2019 and in 2020. Julius Baer expects one-off severance costs of about 17 million francs for 2019, 11 million of which were accounted for in the cost-income-ratio of the first four months.
The bank will report first-half figures on July 22.
