The Zurich-based private bank expects profit to decline in full-year 2023 because of higher credit provisions.
Julius Baer, the Swiss private bank, indicated that assets under management had risen in the first ten months of 2023 by 11 billion francs or 3 percent to 435 billion. The increase was mainly due to continued inflows of net new money and the continued positive performance of equity markets worldwide, according to an ad hoc announcement issued to the media on Monday.
More Client Advisors
The inflow of net new money totaled 10.3 billion francs in the first ten months to the end of October, corresponding to an annualized gain of 3 percent. This was achieved despite the fact that clients continued to deleverage. When the impact of deleveraging was excluded, the inflow of net new money totaled 13.7 billion, signifying growth of 4 percent annualized. Clients from Europe, particularly Switzerland, Asia (mainly Hong Kong and Japan), and the Middle East, in particular the United Arab Emirates and Israel made solid contributions to performance.
This year is the first in the current three-year strategic cycle of the group during which Julius Baer will make targeted investments in growth. Recruiting client advisors in key markets is a part of that, with the number of client advisors rising by 75 in the first ten months of the year to (net) 1,323.
Credit Provisions
As of November 19, the group recorded credit provisions of 82 million francs (66 million after taxes). Despite that, the overall quality of the credit portfolio remains unchanged.
However, because of the credit provisions and a higher tax rate resulting from higher performance contributions from jurisdictions with higher rates of tax, Julius Baer indicated that it does not expect net profit in 2023 to match the performance seen a year earlier.
Falling Share Price»
According to the Zurich-based finance blog «Inside Paradeplatz» (German only), Julius Baer had an outstanding loan position with Signa Group. The company, owned by Austrian investor Rene Benko, is currently experiencing difficulties and according to the blog, the loan position is significantly over 500 million francs. Julius Baer helped finance Benko's and his Thailand's partner purchase of the Swiss department store chain Globus four years ago. The bank for its part indicated that it would not comment on the matter. It told finews.com it does not discuss individual client relationships.
Analysts indicated that the credit provisions overshadowed the bank's ten-month figures. They, and the slower-than-expected growth in net new money, were characterized as disappointing. Julius Baer shares were down by as much as 6.76 percent in trading on Monday.
(article updated)
