Julius Baer, which has been transferring over assets acquired from its purchase last year of the non-US wealth business of Bank of America Merrill Lynch, said today that total client assets at end-June stood at SFr304 billion ($323.2 billion), a 10 per cent gain since the end of 2012.

Assets under management rose by 15 per cent – SFr28 billion – to SFr218 billion, of which SFr24 billion came from the acquired BoA Merrill (IWM) business. Based on figures since the end of June, Julius Baer said the integration of the acquired business is “advancing rapidly across multiple locations”. After the end of June, total acquired AuM stood at SFr47 billion.

“On the back of a recovery in client activity and better cost efficiency, our group markedly improved its operational performance in the first half of 2013. At the same time, we made tremendous progress in the integration of IWM, which makes us confident that we will achieve our goal of having 80 per cent of targeted IWM client assets reported at Julius Baer by the end of this year,” Boris Collardi, chief executive of Julius Baer, said in a statement.

Adjusted profit before taxes rose 28 per cent to SFr319 million from a restated level of SFr249 million a year ago. The related income taxes increased from a restated level of SFr41 million to SFr57 million.

Outside of the impact of the acquired AuM, the rise in assets under management was driven by net new money of SFr3.4 billion, a positive currency impact of SFr2 billion and the SFr200 million from the acquisition of a 60 per cent equity participation in TFM Asset Management, partly offset by the disposal on 31 May of Julius Baer’s former Italian onshore subsidiary Julius Baer SIM, with SFr1 billion in AuM, as well as by a marginally negative market performance of SFr1 billion.

Julius Baer said market performance was hit by several clients’ exposure to under-performing asset classes such as emerging market securities and gold as well as by the global market corrections in June 2013,” according to a statement today. The firm said it reported a “clearly positive performance across practically all discretionary mandates it manages”.

Due to the focus on acquiring the BoA Merrill unit, the pace of standalone net hiring of relationship managers decelerated, which was one of the factors behind the year-on-year slowdown in the net new money rate to 3.6 per cent (annualized).

Operating income

Operating income rose to SFr1.077 billion, a year-on-year increase of 25 per cent, above the 20 per cent year-on-year increase in average AuM to SFr212 billion.

The gross margin (including the businesses transferred in February, April and at the end of May 2013), improved to 102 basis points (H1 2012: 98 bps, H2 2012: 94 bps).

Net commission and fee income went up by 27 per cent to SFr599 million, driven by the increase in average AuM and a recovery in client transaction volumes. Net interest and dividend income declined by 15 per cent to SFr275 million as the benefit of the increase in loan volumes was more than offset by a year-on-year decrease in dividend income on trading portfolios from SFr90 million to SFr33 million.

Revised accounting standards related to the group’s pension plan that became effective on January 1, 2013 caused a restatement of certain expense and balance sheet items for the 2012 reporting period. The restatement increased reported operating expenses for the full year 2012 by SFr12 million and reduced 2012 adjusted net profit by SFr10 million.

As a result, the adjusted cost/income ratio declined to 69 per cent; excluding the expenses related to the US tax situation, the adjusted cost/income ratio was 68 per cent, the bank said.