Julius Baer posts 16% margin boost through April, AuM drops


FILE PHOTO: People walk past a branch of Swiss bank Julius Baer in Zurich
FILE PHOTO: People walk past a branch of Swiss bank Julius Baer in Zurich, Switzerland February 3, 2020. REUTERS/Arnd Wiegmann/File Photo

May 19, 2020

By Brenna Hughes Neghaiwi

ZURICH (Reuters) – Julius Baer <BAER.S> posted a 16% rise in gross margins in the first four months of 2020 to 392 billion Swiss francs ($403.38 billion), the Swiss private bank said on Tuesday, while coronavirus turmoil in markets dented assets under management.

“We are pleased to be able to report a strong start to the year, although it is clearly too early to assess with any certainty the impact of the COVID-19 crisis on the global economy, the financial markets, and the results of Julius Baer for the remainder of 2020,” Chief Executive Philipp Rickenbacher said in a statement.

The trading update from Switzerland’s third-largest lender provided the first insight into the impact of the COVID-19 pandemic on wealth managers in April, after big banks UBS <UBSG.S> and Credit Suisse <CSGN.S> posted bumper profits for the first quarter and as wealth managers pointed to resilience.

Gross margins rose to 95 basis points as Julius Baer benefited from an “exceptional increase” in trading volumes, while assets under management fell 8% in the first four months of 2020 to 392 billion Swiss francs ($403.38 billion) on the back of falling markets and a strengthening Swiss franc.

The bank pointed to a slightly negative margin impact from lower net interest income and a moderate rise in expected credit losses, without providing figures.

Baer is cutting 300 jobs this year after a double-digit percentage earnings decline in 2019, impacted by outflows at its ailing Italian subsidiary Kairos.

Its three-year strategic programme was on track, Baer said. It posted net new money growth just over 2%, as wealth management inflows particularly from Europe-based clients were partly offset by outflows caused by client deleveraging.

($1 = 0.9718 Swiss francs)

(Reporting by Brenna Hughes Neghaiwi, editing by John Miller)





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