Julius Baer Group Ltd. / Key word(s): Interim Report
Ad hoc announcement pursuant to Art. 53 LR
Continued net new money inflows support asset growth – Relationship manager hiring pace maintained – Seasonal slowdown in client activity – Capital ratios improved further
Zurich, 20 November 2023 – In the first ten months of 2023, Julius Baer enjoyed generally solid operating momentum, with net inflows supporting the growth of assets under management. Investments in future growth continued, with an additional 75 (net) relationship managers were successfully onboarded in the first ten months of the year and with a promising pipeline supporting further hiring. Julius Baer remains solidly capitalised: Fuelled by ongoing resilient profitability, the Group’s CET1 capital ratio improved to 16.1% by the end of October 2023. Following a rise in credit provisions in November and a year-to-date increase in the effective tax rate, the Group currently does not expect the full year 2023 net profit level to reach the one achieved in 2022, which was the second best in the Group’s history.
Assets under management growth driven by net inflows and market performance
In the first ten months of 2023, assets under management rose by CHF 11 billion (3%) to CHF 435 billion. The increase was driven mainly by continued net new money inflows and a net positive global equity market performance, partly offset by a negative currency impact resulting from the Swiss franc’s year-to-date strengthening against most major currencies.
Net new money inflows continued, reaching CHF 10.3 billion (3% annualised) by the end of October 2023, despite the impact of further client deleveraging. Excluding the impact of deleveraging, net new money amounted to CHF 13.7 billion (4% annualised), with solid contributions from clients domiciled in Europe (especially Switzerland, the UK & Ireland, Luxembourg, Spain, and Germany), Asia (especially Hong Kong and Japan), the Middle East (especially the UAE), and Israel.
Gross margin over 89 basis points
The gross margin for the first ten months of 2023 exceeded 89 basis points (bp), an improvement from the 87 bp reported for full year 2022.
In the July–October 2023 period, the gross margin was over 83 bp, a decline from the 93 bp reported for the first half year of 2023. The latter decrease was driven mainly by a lower contribution from net income from financial instruments measured at FVTPL**, which was impacted by a notable decline in client activity in an environment of lower market volatility, and to a lesser extent by a modest reduction in treasury swap income. In the July–October 2023 period, the contribution from net interest income also moderated slightly (compared to H1 2023), following a further rise in the cost of deposits, as clients continued to shift current account balances into time and call deposits.
Cost/income ratio close to 68%, pre-tax margin stable at 27 bp, higher effective tax rate
2023 is the first year of the Group’s new three-year strategic cycle, for which Julius Baer has increased its focus on making targeted growth investments, including accelerated hiring of top talent in its key markets. In the first ten months of 2023, the number of relationship managers grew by 75 FTEs (net) to 1,323.
Partly as a result of these and other ongoing growth investments, the adjusted cost/income ratio for the first ten months of 2023 increased to close to 68%, above the 66% reported for full year 2022. However, the adjusted pre-tax margin was unchanged at 27 bp.
The adjusted tax rate increased to 16.5% over the first ten months of 2023, compared to 12.4% for full year 2022. The increase in the effective tax rate is the result of a larger pre-tax profit contribution from higher-tax jurisdictions.
Julius Baer’s solid capital position strengthened further. The Group’s CET1 capital ratio improved to 16.1% at the end of October 2023 (end 2022: 14.0%) and the total capital ratio grew to 25.3% (end 2022: 21.2%). At these levels, the Group’s CET1 and total capital ratios remain well above the Group’s own floors of 11% and 15% respectively, and significantly in excess of the regulatory requirements of 8.2% and 12.4% respectively.
The Group’s tier 1 leverage ratio improved to 5.2% (end 2022: 4.3%), substantially above the regulatory requirement of 3.0%.
As part of the prudent management of its balance sheet, Julius Baer regularly reviews the quality of its loan book. As of 19 November 2023, the Group had booked valuation adjustments totalling CHF 82 million (CHF 66 million net of taxes), of which CHF 70 million was booked against the Group’s credit portfolio after 31 October 2023.
The overall quality of the loan book and the balance sheet remains unaffected, with a consistently strong capitalisation and high liquidity providing ample capacity to absorb any risks resulting from the Group’s business.
Mainly as a consequence of the rise in credit provisions and the aforementioned increase in the effective tax rate, the Group currently does not expect the full year 2023 net profit level to match the one achieved in 2022.
*Based on unaudited management accounts. This media release contains certain financial measures that are not defined or specified by IFRS, the definitions of which are provided in the Alternative Performance Measures document available at www.juliusbaer.com/APM.
**Fair value through profit or loss.
Media Relations, tel. +41 (0) 58 888 8888
Investor Relations, tel. +41 (0) 58 888 5256
1 February 2024: Publication and presentation of 2023 full-year results, Zurich
18 March 2024: Publication of Annual Report 2023 including Remuneration Report 2023
18 March 2024: Publication of Sustainability Report 2023
11 April 2024: Annual General Meeting, Zurich
About Julius Baer
Julius Baer is the leading Swiss wealth management group and a premium brand in this global sector, with a focus on servicing and advising sophisticated private clients. In all we do, we are inspired by our purpose: creating value beyond wealth. At the end of October 2023, assets under management amounted to CHF 435 billion. Bank Julius Baer & Co. Ltd., the renowned Swiss private bank with origins dating back to 1890, is the principal operating company of Julius Baer Group Ltd., whose shares are listed on the SIX Swiss Exchange (ticker symbol: BAER) and are included in the Swiss Leader Index (SLI), comprising the 30 largest and most liquid Swiss stocks.
Julius Baer is present in around 25 countries and over 60 locations. Headquartered in Zurich, we have offices in key locations including Bangkok, Dubai, Dublin, Frankfurt, Geneva, Hong Kong, London, Luxembourg, Madrid, Mexico City, Milan, Monaco, Mumbai, Santiago de Chile, São Paulo, Shanghai, Singapore, Tel Aviv, and Tokyo. Our client-centric approach, our objective advice based on the Julius Baer open product platform, our solid financial base, and our entrepreneurial management culture make us the international reference in wealth management.
For more information visit our website at www.juliusbaer.com.
Cautionary statement regarding forward-looking statements
This media release by Julius Baer Group Ltd. (‘the Company’) includes forward-looking statements that reflect the Company’s intentions, beliefs or current expectations and projections about the Company’s future results of operations, financial condition, liquidity, performance, prospects, strategies, opportunities and the industries in which it operates. Forward-looking statements involve all matters that are not historical facts. The Company has tried to identify those forward-looking statements by using the words ‘may’, ‘will’, ‘would’, ‘should’, ‘expect’, ‘intend’, ‘estimate’, ‘anticipate’, ‘project’, ‘believe’, ‘seek’, ‘plan’, ‘predict’, ‘continue’ and similar expressions. Such statements are made on the basis of assumptions and expectations which, although the Company believes them to be reasonable at this time, may prove to be erroneous.
These forward-looking statements are subject to risks, uncertainties and assumptions and other factors that could cause the Company’s actual results of operations, financial condition, liquidity, performance, prospects or opportunities, as well as those of the markets it serves or intends to serve, to differ materially from those expressed in, or suggested by, these forward-looking statements. Important factors that could cause those differences include, but are not limited to: changing business or other market conditions, legislative, fiscal and regulatory developments, general economic conditions in Switzerland, the European Union and elsewhere, and the Company’s ability to respond to trends in the financial services industry. Additional factors could cause actual results, performance or achievements to differ materially. In view of these uncertainties, readers are cautioned not to place undue reliance on these forward-looking statements. The Company and its subsidiaries, and their directors, officers, employees and advisors expressly disclaim any obligation or undertaking to release any update of or revisions to any forward-looking statements in this media release and any change in the Company’s expectations or any change in events, conditions or circumstances on which these forward-looking statements are based, except as required by applicable law or regulation.
End of Inside Information
|Company:||Julius Baer Group Ltd.|
|Phone:||+41 58 888 11 11|
|Listed:||SIX Swiss Exchange|
|EQS News ID:||1776679|
|End of Announcement||EQS News Service|
1776679 20-Nov-2023 CET/CEST