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Julius Baer Reports Significant Profits Jump

Tom Burroughes

19 May 2021

today said that its profitability “rose significantly” in the first four months of 2021 on the back of strong growth in client assets and a solid gross margin development. 

While the Zurich-listed bank did not give hard profit figures today in an update about its financial position, it did say that assets under management rose to SFr470 billion ($523.7 million) at the end of April, a year-to-date increase of 8 per cent. The increase was driven by continued net new money inflows (4 per cent annualised), positive stock market performance, and the softening of the Swiss franc, particularly against the US dollar, euro, and UK pound.

Switzerland’s third-largest bank said the positive effects were complemented by the absence of credit losses and a further improvement in cost efficiency. 

The group remains on track to deliver its targets of the three-year revenue and cost-improvement plan started last year, it said. 

Julius Baer said it had a gross margin of almost 90 basis points on its business by the end of April, rising from 84 bps in the second half of last year. 

While client activity remained elevated throughout the first quarter, it slowed down to “more subdued levels” in April, the bank said.

Cost control measures benefited from the effects of the measures taken last year under the SFr200 million gross cost-reduction programme announced in February 2020. Together with the concurrent robust revenue development, this resulted in an adjusted cost/income ratio of around 60 per cent (down from 66 per cent in the second half of 2020) and an adjusted pre-tax margin of 36 bps (up from 24 bps in the second half of 2020).

At the end of April, Julius Baer’s Common Equity Tier 1 capital ratio had risen to 16.6 per cent (end 2020: 14.9 per cent, comfortably above regulatory requirements in terms of a bank’s capital buffer).