Julius Baer Group: Massive Drop in Profits

As a result of the tax dispute with the US authorities, Zurich based Julius Baer Group has seen a massive drop in profits. However, it is believed an agreement with the American justice dept has now been reached.

The annual results of the Julius Baer Group  would be satisfying in and of itself, if not for the enormous provision (521 million francs) for the regulation of the tax dispute with the US. Against this background, the Bank has recorded a drop in profits of 67 percent over the previous year. The results though still yielded a net profit of 121 million francs, as of an announcement in Zurich of Monday.

By contrast, improved net profit – excluding the US provisions – rose by 20 percent to 701 million francs, which is slightly lower than expected by analysts; who had predicted 721 million Swiss francs. 

More Dividend

The Directors intend that from 13 April 2016 to propose to the Ordinary Annual General Meeting an increase in the ordinary dividend by 10 percent to 1.10 Swiss francs per share.

After the US provision and the completion of the IWM-integration the group also announced on Monday an update of its capital and dividend policy. While the previous lower limit of 15 percent for the (phase-in) BIS total capital ratio remains unchanged, the group introduces a new lower limit of 11 percent for the (phase-in) until a CET1 capital ratio.

Just Within the Target Band of Net New Money

Julius Baer also intends to let the ordinary dividend payout ratio to rise to 40% of adjusted net income.

Assets under management increased by CHF 9 billion or 3 percent to 300 billion Swiss francs, which is also in line with expectations, with a negative currency impact of CHF 10 billion. Net new money contributed CHF 12 billion at (+4.2 percent). Thus Julius Baer has almost reached the target range of between 4 and 6 percent.

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