Bank Julius Baer announced new targets for 2023 to 2025. It also gives results for the first four months of 2022, which saw a drop in assets under management.
Swiss Julius Baer said that it is «well on track» to achieving its financial targets for its current 2020-2022 strategy cycle, and has laid out the goals for the next two-year cycle starting in 2023.
One of those is returning more capital to its shareholders, targeting an adjusted return on common equity tier 1 capital (CET1) of «at least» 30 percent during the period from 2023 through 2025, the private bank announced Thursday.
It said it updated the capital distribution policy with «a clear commitment» to return capital exceeding a CET1 capital ratio of 14 percent through annual share repurchases and the 50 percent dividend payout ratio. Through the end of April, the bank repurchased a total of 987,000 shares at a value of 50 million Swiss francs.
Wealth Management
The bank said it would focus on sustainable profit growth and the «development of a pure wealth management business model.»
It will focus on improving earning quality by increasing its ability to improve recurring revenues, including increasing its wealth management mandate by offering a strong value proposition to complement its advisory solutions.
«We are embarking on a new phase of profitable growth, building on the transformation we have successfully pursued since 2020. Our unique client-centric business model with dedicated focus on high net worth and ultra-high net worth clients gives us a strong competitiveness to shape our future. Building on this strength, we will consolidate our position as the leading international wealth manager by the end of the decade. To do so, we will grow business volumes and profitability, improve earnings quality and evolve the way we do business», said CEO Philipp Rickenbacher.
Assets Under Management
For the first four months of the year, Julius Baer reported assets under management of 457 billion Swiss francs ($460 billion), which was a decline of 5 percent from the end of last year.
It said the decline was the result of negative market developments, business divestments, and deleveraging by clients. Those factors were partly offset by a positive currency effect due in particular to the dollar appreciation against the Swiss franc.
«The negative market performance was driven by substantial declines in equity and bond markets following concerns about the consequences of the start of the war in Ukraine, the additional Covid-related restrictions in China, and the significant realized and expected future increases in inflation and interest rates», the bank said in its interim statement.
Cost Management
The bank aims to save 120 million Swiss francs on a gross basis by 2025, by streamlining its geographic footprint and market coverage.
Medium-Term Targets (2023-2025)
- Adjusted cost/income ratio of below 64% by 2025
- Adjusted pre-tax margin of 28 to 31 basis points by 2025
- Over 10% annual growth in adjusted pre-tax profit during the 2023-2025 cycle
- Adjusted return on BIS CET1 capital of at least 30% during the 2023-2025 cycle
The statement said that the strategy will be supported by a binding sustainability strategy and strong risk management.
