The Swiss private bank's departing CEO has improved the profit outlook after a torrid end to 2018.

Half-year results for Julius Baer showed a rebound in net profit after a tough second half of 2018 for the Swiss private bank. The wealth firm said that a cost-cutting programme introduced in February is beginning to kick in, with SFr17 million ($17.2 million) having been clawed back in a one-off redundancy measure, and further efforts to shave SFr100 million off the bottom line being reflected into 2020.

The group returned a net profit of SFr343 million, down by 23 per cent from a year ago but up by 18 per cent from a dismal H2 2018.

Assets under management rose over the six months by 8 per cent to SFr412 billion ($412 billion), up by 3.2 per cent on an annualised basis, supported by stronger markets and client activity, the bank said, but below a mid-term target of 4-6 per cent. Overall, AuM was dampened by large outflows at the bank’s Italian Kairos subsidiary, which the Swiss holder has mooted it may sell as it continues to recover margins.

The Zurich-based wealth manager said that client transactions had continued to pick up after heavy declines during the late 2018 volatility that hit the bank into 2019. Gross margins improved from 3.6 base points in the last six months to 83.2 bps as cost cutting measures took hold.

Adjusted cost/income ratio stood at a comfortable 71 per cent, an improvement on 74.3 per cent in H2 2018 but up considerably from 67.3 per cent registered a year ago.
Total capital ratio stood at 20.7 per cent, well above the minimum regulatory requirements and the group’s own floor.

CEO Bernhard Hodler, who hands over internally to Philipp Rickenbacher in September said: “Profitability has markedly improved compared to the second half of 2018, as we saw client activity and asset valuations recover substantially. The cost-reduction programme we initiated earlier this year is on track, and we will see its effects materialise in the coming months and throughout 2020, as targetted.

“At the same time, we have made targetted investments in the future of our business. Julius Baer is in excellent shape, thanks to the dedication and relentless work of our staff. And I am convinced that, with Philipp Rickenbacher being appointed as my successor, I am leaving the group in very good hands.”