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Earnings

Julius Baer assets hit record as money inflows pick up

Key Points
  • Baer in February scaled back growth targets and announced large-scale cost cuts after a tough end to 2018 caused it to miss its goals.
  • It said on Friday an improved gross margin and contained expense growth pushed its underlying cost/income ratio below 73% from 74.3% in the second half of 2018.
A sign sits on a wall outside the offices of Julius Baer Group Ltd. in Geneva, Switzerland.
Valentin Flauraud | Bloomberg | Getty Images

Assets under management at Julius Baer rose 12% in the first four months to a record 427 billion Swiss francs ($425.34 billion), the Swiss private bank said on Friday, helped by strong markets, exchange rates and accelerating fund inflows.

"After a soft start to the year, net new money growth accelerated towards the end of the period, resulting in a growth rate of 3% (annualized)," it said, pointing to inflows from clients in Asia and Europe and new relationship managers hired last year.

Baer in February scaled back growth targets and announced large-scale cost cuts after a tough end to 2018 caused it to miss its goals.

It said on Friday an improved gross margin and contained expense growth pushed its underlying cost/income ratio below 73% from 74.3% in the second half of 2018.

"This improvement did not yet benefit from the 2019 cost reduction program, the implementation of which has started and is on track," it added.

It anticipated booking one-off severance cost of around 17 million francs, all in 2019, for reducing headcount by a net 2% this year.

Inflows in Baer's core wealth management operations were partially offset by net outflows from Kairos funds following a decline in 2018 performance, Baer said.

"Net new money was also impacted to some extent by a limited number of client exits in the context of the ongoing client risk review project, as well as by modest outflows following a wider application of negative interest rates to large cash holdings," Baer said.