The Swiss private bank posted its first half results for 2016 today, with other Swiss players due to report figures in the coming days.

Julius Baer, which last week announced a major restructuring of its business lines with senior manager changes, today posted half-year results showing that assets under management stood at SFr311 billion ($314 billion) at end-June, a 4 per cent rise from the end of 2015.

The AuM rise was caused by an addition of SFr8.6 billion following the first-time consolidation of Kairos Investment Management, net new money of SFr5.5 billion (3.7 per cent on an annualised basis) and positive market performance of SFr1.6 billion, partly offset by a negative currency effect of SFr4.0 billion, the bank said in a statement.
 
After a slow start to the year, net inflows accelerated towards the end of the period. Net new money was supported by continued inflows from Asia, the Middle East and Central and Eastern Europe, from the local businesses in Switzerland, Germany and Italy, as well as from the cross-border European business. These inflows were partly offset by slow momentum in Latin America, by some client deleveraging in Asia, as well as by the tail end of the regularisation of legacy assets in France and Italy.

The H1 2016 results were issued a few days after the Zurich-listed bank said it was streamlining its management structure into a new regional set-up, with one senior executive stepping down after a difference of views about the changes, while new appointments were also unveiled. (For more details, see here.) The new set-up will consist of five regions: Switzerland, Europe (new), emerging markets (new), Latin America and Asia Pacific

Other figures
Operating income grew to SFr1.425 billion, an increase of 1 per cent compared to the first half of 2015. Following lower client transaction and trading volumes, the gross margin declined to 95 basis points, a reduction of four basis points from H1 2015. However, compared to H2 2015 the gross margin increased by almost seven basis points, supported by an increase in trading income that was boosted by higher foreign exchange volumes following the UK’s Brexit vote in June, Julius Baer said.

Adjusted operating expenses fell to SFr940 million. This represents a year-on-year reduction of 1 per cent if the $350 million initial provision for the settlement with the US Department of Justice (the H1 2015 US provision) is excluded from the expenses in the first half of 2015. If that H1 2015 provision is included, the expense drop was 27 per cent. (The bank settled with US authorities over its legacy cross-border business in the US.)

The adjusted cost/income ratio remained at 64.7 per cent. Without the effect of a pension fund plan amendment in Switzerland, the adjusted cost/income ratio increased to 69.1 per cent reflecting the lower gross margin as well as the group’s accelerated investments in growth this year.

Adjusted net profit surged by 270 per cent to SFr402 million and adjusted earnings per share attributable to shareholders rose by 274 per cent to SFr1.84. Excluding the H1 2015 US provision, adjusted net profit for the group and adjusted EPS grew by 5 per cent, however.

IFRS net profit attributable to shareholders surged by 828 per cent to SFr362 million.

The bank said it is succeeding in its plans to speed up hiring of experienced relationship managers this year. Altogether, over 200 RMs have decided to join the group in 2016 (based on completed signings), translating to almost 50 net new managers (when those leaving are taken in account), which means the bank is ahead of the net total of 40 RMs hired in all of 2015.