Profits Dive for Julius Baer in 2019
Global pre-tax profits at Julius Baer fell 37 percent, prompting the Swiss private bank to announce 300 job cuts and a boost in tech investments to improve margins.
Despite a slight increase in operating income, Julius Baer posted net profits of 465 million Swiss francs, a 37 percent drop, due to a 250 million franc impact from legal provisions and a goodwill impairment related to newly acquired Italian asset manager Kairos. Excluding outflows from Kairos, net new money grew 4.1 percent (2.8 percent when included), driven primarily by clients from Europe and Asia, leading to a 12 percent increase in assets under management.
The bank registered gross margins of 82 basis points (bps), down from 2018’s 86 bps, and it hopes to grapple with the pressures through a new three-year strategy based on cost efficiency and client focus.
Cost Efficiency and Client Focus
According to Julius Baer chief executive Philipp Rickenbacker, the Swiss pure play will look to shave 300 jobs globally as part of its broader plans to cut 200 million Swiss francs in expenses and improve its cost-income ratio to 67 percent by 2022 from 2019’s 71 percent.
And on the top line, the bank hopes to improve revenues by more than 150 million Swiss francs with focus on broadening its offering for the ultra-wealthy and increasing investment in technology to enhance its advisory capabilities.
«We will accelerate our investments in human advice and technology,» Rickenbacher said. «And we will shift our leadership focus from an asset-gathering strategy to one of sustainable profit growth.»
