The bank reported a broadly strong set of figures today, including a tighter cost/income ratio and a higher capital adequacy ratio, in addition to figures for profit and assets under management.

Julius Baer today reported that total assets under management rose to SFr482 billion ($583 billion) at the end of 2021, rising by SFr48 billion, or 11 per cent from a year earlier, buoyed by rising markets and net new inflows.

Gains to the US dollar more than outweighed depreciation in the euro over the period, the Zurich-listed private banking group said.

Net new money improved by 30 per cent to SFr20 billion, growing at a rate of 4.5 per cent over the year. All regions saw positive net inflows, with “particularly strong” contributions from clients domiciled in Western Europe (especially the UK, Ireland, Germany, Switzerland, and Luxembourg), Asia (especially Singapore, Japan, and India), the UAE, and Brazil.

Including assets under custody of SFr80 billion, total client assets grew by 11 per cent to SFr561 billion.

Pre-tax profit, assessed on an IFRS reporting basis, rose by 49 per cent to SFr1.259 billion. As income taxes increased by 20 per cent, net profit rose 55 per cent to SFr1.083 billion, surpassing the SFr1 billion mark for the first time. Net profit attributable to shareholders of Julius Baer also rose by 55 per cent to SFr1.082 billion. Adjusted pre-tax profit rose 19 per cent in 2021 to SFr1.329 billion.

“The quality of our financial performance is the result of the strategic agenda we initiated in 2020, with a shift to smart and profitable asset growth, a sharpening of our value proposition, and an acceleration of our investments in technology. Capital generation remains strong, and our business is using this capital efficiently to the benefit of our clients and shareholders,” Philipp Rickenbacher, Julius Baer’s chief executive, said. 

Operating income rose 8 per cent year-on-year to SFr3.858 billion, aided by a strong increase in net commission and fee income. Net commission and fee income grew by 14 per cent to SFr2.296 billion. This increase was driven mainly by significantly higher advisory and management fees, which went up by 22 per cent to SFr1.644 billion, well above the 15 per cent rise in monthly average AuM. 

Net interest income rose by 1 per cent to SFr627 million, with the year-on-year development affected by the sharp fall in US interest rates in the first half of 2020. Operating income was only marginally affected by credit provisions of SFr2 million booked as net credit losses on financial assets (2020: SFr36 million), reflecting the group’s careful management of credit risks and the high quality of its exposure.

The bank said operating costs fell by 5 per cent to SFr2.599 billion. While personnel expenses rose by 4 per cent to SFr1.661 billion, general expenses fell by 4 per cent to SFr683 million and amortisation and impairment of customer relationships fell 17 per cent to SFr58 million. 

Adjusted operating costs exclude merger and acquisition-related costs (SFr70 million for 2021 and SFr269 million for 2020).

The adjusted cost/income ratio (which excludes adjusted provisions and losses) narrowed to 63.8 per cent from 66.4 per cent in 2020.

The bank’s Common Equity Tier 1 capital ratio – a standard international measure of a lender’s capital buffer – rose to 16.4 per cent, up from 14.9 per cent at the end of 2020.7