Julius Baer Beats Estimates

Boris Collardi,CEO Julius Baer

Boris Collardi,CEO Julius Baer

The Swiss private bank has exceeded earnings estimates in the first half and reported record assets under management. The bank has been helped by strong inflows of new money.

Julius Baer announced today that the operating income at the bank rose to 1'425 million francs, this represented an increase of 1 percent compared with the 1st half of 2015.

As a result of lower customer transactions and trading volumes, gross margin fell to 95 basis points, an increase of four points from the first half of 2015. However, compared to the 2nd half of 2015, the gross margin increased by nearly seven points, supported by a rise in income from trading activities, which in turn was favored by higher trading volumes in foreign currency, after the U.K. Brexit vote.

Profit Better Than Expected

Net profit increased by 812 percent to 362 million francs. The first half of 2015 was marked by provisions set aside for US related issues, in the amount of 350 million francs. 

Thus Julius Baer has significantly exceeded market expectations.Analysts expected a IFRS consolidated profit of 311 million francs.

Assets under management climbed in the first six months to 311 billion francs. This is an increase of 4 percent 12 billion compared to the end of 2015. On this point, Julius Baer surpassed the Zurich private bank analysts' expectations.

Solid Inflows

After a slow start to the year, net inflows accelerated towards the end of the reporting period, which resulted in an (annualised) Net New Money growth of 3.7 percent.Thus the bank is just below the annual target of 4 to 6 percent. 

The new money was supported by continuous inflows from Asia, the Middle East, Central and Eastern Europe, Switzerland, Germany and Italy as well as the cross-border European business.

The sluggish development in Latin America, a certain deleveraging by clients in Asia as well as the expiring self-declarations in France and Italy have canceled these inflows partly, the bank said.

The adjusted cost income ratio was unchanged at 64.7 percent.

More to follow.

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