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AuM Rises At Julius Baer, Margins Widen

Tom Burroughes

28 May 2019

(Repeats article from yesterday)

said that its assets under management had reached SFr427 billion ($425.8 billion) at the end of April this year, a rise of 12 per cent since the start of 2019. The rise was driven by gains to markets and net inflows as well as by the firm’s consolidation of NSC Asesores, the Mexican business.

The Zurich-listed bank said that net new money growth accelerated towards the end of the period after a slow start, producing a 3 per cent annualised growth rate overall.

From the low levels in the second half of 2018, the improving market environment continued to drive client transaction activity and brokerage commissions higher throughout the period, particularly in Asia, Julius Baer said.

In gross margin terms, this increase - combined with higher performance fees from its Kairos asset management subsidiary in Italy - more than compensated for a modest decline in the trading gross margin, following lower foreign exchange volatility.

As a result, the overall gross margin rose to 82 basis points, a marked recovery from the 79.6 basis points reported in the second half of 2018, and the even lower levels seen in November-December 2018.

The bank’s cost/income ratio inched below 73 per cent from 74.3 per cent in the second half of last year. The tightening did not yet benefit from Julius Baer’s 2019 cost cutting programme.

“The resulting cost savings are expected to start materialising partly in the financial results for the second half of 2019 and fully in 2020. In relation to the programme, the group anticipates booking one-off severance costs of approximately SFr17 million, all in 2019, of which SFr11 million were already accounted for in the cost/income ratio calculation for the first four months of the year.

In Latin America, Julius Baer increased its ownership of NSC Asesores in Mexico from 40 per cent to 70 per cent, while Julius Baer’s Brazilian subsidiary GPS signed a partnership agreement with leading local digital financial advisor Magnetis.

In Asia, SCB Julius Baer, the joint venture with The Siam Commercial Bank, launched formal operations following the receipt of the necessary licences in Thailand. In Switzerland, the bank said it will enter a partnership for the management of digital assets with SEBA Crypto AG, once SEBA has received the FINMA banking and securities dealer licence.

In Europe, Bank Julius Baer expanded its local footprint in two core markets by opening a new office in Belfast, its fifth in the UK, and in Barcelona, its second office in Spain. Julius Baer is currently reviewing strategic options for Kairos.