Overall, the private bank reported a robust set of results. Its growth in assets under management benefited from rising net new inflows.
Julius Baer, which has described Asia as its second home market, yesterday reported a pre-tax profit on an IFRS basis of SFr707 million ($767 million) for the six months to the end of June, rising by 22 per cent from the same period a year ago.
Once taxes were taken out, net profit attributable to shareholders rose by 23 per cent to SFr606 million, it said in a statement.
On an adjusted basis, pre-tax profit rose by 20 per cent to SFr742 million.
Assets under management rose by SFr52 billion to a record high of SFr486 billion, an increase of 12 per cent since the end of 2020, on the back of positive market performance, a weaker Swiss franc (particularly against the US dollar) and continued positive net new money inflows. Net new money doubled to SFr10 billion (annualised net new money growth rate 4.6 per cent), with particularly strong contributions from clients domiciled in Asia and Western Europe, as well as solid growth in the Middle East.
Including assets under custody of SFr79 billion (+10 per cent), total client assets grew to SFr565 billion, an increase of 12 per cent from year-end 2020.
“The achievements of the first half of 2021 demonstrate how Julius Baer creates value: we have successfully shifted our focus to sustainable profit growth and continuously strengthened the attractiveness of our value proposition for existing and new clients alike. The quality of our business model is supported by the passionate dedication of our staff, and by efficient and scalable operations,” Philipp Rickenbacher, chief executive, Julius Baer, said.
Operating income rose by 8 per cent to SFr1.993 billion, reflecting the combined benefit of strongly increased net commission and fee income and the virtual disappearance of net credit losses, the bank said. These positive developments were partly offset by a fall in net interest income, following the year-on-year decline in US interest rates, as well as by somewhat lower net income from financial instruments as market volatility eased from the extraordinarily high levels seen in the first half of 2020.
Net commission and fee income rose by 12 per cent to SFr1.155 billion. This increase was driven mainly by a 19 per cent improvement in advisory and management fees on the back of the growth in client assets and higher-value mandate penetration.
Adjusted personnel costs fell by SFr1 million to SFr849 million, supported by the 1 per cent year-on-year decline in the monthly average number of employees as well as a decrease in the severance costs related to the restructuring programme initiated in 2020 to SFr14 million (H1 2020: SFr19 million).
At the end of June the bank had a Common Equity Tier 1 capital ratio – a common measure of a bank’s capital buffer – of 16.7 per cent, up from 14.9 per cent at the end of 2020.