Julius Baer Beats Forecasts, Eyes BofA Unit
Swiss private bank Julius Baer posted first half numbers that beat analysts’ forecasts, helped by strong client money inflows of 5.5 billion Swiss francs ($5.54 billion).
The business is believed to be in talks with Bank of America Merrill Lynch about buying its international wealth management unit in a deal which analysts believe could be worth up to 2 billion francs ($2.01 billion).
CEO Boris Collardi told CNBC that the business would be a good strategic fit for the company. Julius Baer said in a statement that it is “selectively considering acquisitions” but did not comment specifically on the potential deal with Bank of America Merrill Lynch .
Julius Baer’s results take the bank’s annualized net new money growth rate to 6.4 percent, above its medium term target. Inflows were helped by its growth markets, as well as the onshore German and Swiss businesses.
However, the bank highlighted that owing to continued uncertainty around the euro zone crisis, its clients remained cautious, “leading to relatively restrained transaction and trading activity”. As a result, its gross margin fell to 98 basis points, down 7 bps from the first half of 2011.
Adjusted net profit rose by 13 percent to 221 million francs, topping analysts’ forecasts of 202 million francs, thanks to cost-cutting.
Another element hanging over Julius Baer is ongoing talks with U.S. authorities over a settlement dealing with alleged tax evasion practices.
The CEO told CNBC that a settlement in November would be “good news”, but that a deal must be seen in the context of the U.S. elections, which could slow the process. Collardi said he hopes to strike a deal before the end of the year, but so far, the bank had not set aside any provisions for a potential settlement.
The bank said its medium term targets remain unchanged. In February, Julius Baer revised down its profit margin target and raised its cost-income target as a result of the persistent strength of the Swiss franc and low client activity.