Julius Baer Group Ltd. slumped the most in a year after the Swiss wealth manager posted a weaker boost to its business than some analysts had expected after the turmoil at rival Credit Suisse Group AG.
(Bloomberg) — Julius Baer Group Ltd. slumped the most in a year after the Swiss wealth manager posted a weaker boost to its business than some analysts had expected after the turmoil at rival Credit Suisse Group AG.
The Zurich-based bank reported assets under management rose just 1% in the first four months, to 429 billion francs ($477 billion), while net new money “went off to a slow start” at the beginning of the year as clients pared back risk.
Investors and analysts were disappointed by the meager growth because Julius Baer had been expected to be a major beneficiary of the turmoil that had hit Credit Suisse before its ultimate collapse in March. Chief Executive Officer Philipp Rickenbacher had helped stoke the optimism, saying in February that the bank had gained from clients fleeing rivals.
The shares fell as much as 8.5% in Zurich, the most since May 2022, and were down 7.7% at 10:02 a.m. local time.
The Swiss bank said about 40 relationship managers had been brought on in the first four months. Credit Suisse has seen an exodus of staff and further job cuts are ahead, handing competitors an opportunity to build out their own teams.
Julius Baer’s hiring will “meaningfully benefit” the generation of net new money over the medium term, according to the bank, which saw 3.5 billion francs of net new assets. It also warned that clients are still cautious on investing and that lower market volatility is reducing revenue at some businesses.
While the “hiring of relationship managers should help over the medium term, we believe short-term expectations were higher,” analysts at JPMorgan Chase & Co. including Kian Abouhossein wrote in a note to investors. Julius Baer “was seen by the market as a winner from the Credit Suisse turmoil, which is not evident in these results.”
Read More: Julius Baer Slumps as AUM, New Money Disappoint: Street Wrap
Key figures for the first four months
- Cost-to-income ratio 66%, compared with a target of more than 64% by 2025
- The group’s BIS CET1 capital ratio improved to 15.0%
The gross margin, a key measure of profitability, saw a slight drop at 92 basis points, compared to below the close-to-93 basis points achieved in the second half of 2022. Last month the bank said it completed a buy-back program which aimed to repurchase up to 400 million Swiss francs of its shares.
“The first four months of 2023 provided a challenging backdrop for wealth managers, with uncertainties in particular areas of the banking sector toward the end of the period,” Julius Baer said.
(Adds shares)
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