Interim Management Statement for the first four months of 2012
Assets under management CHF 178 billion, an increase of 4% from the end of 2011 – Continued solid net inflows – Gross margin impacted by subdued risk appetite and reduced FX volatilityJulius Baer Group’s assets under management (AuM) amounted to CHF 178 billion at the end of April 2012, an increase of 4% from the end of 2011. Total client assets grew by 4% to CHF 268 billion.
The increase in AuM was driven by continued solid net new money and a positive market performance, which together outweighed the negative currency impact. Net new money inflows for the first four months 2012 were, on an annualised basis, just above the Group’s 4-6% medium-term target range, with particularly strong contributions from the growth markets and from the local private banking business in Germany. Julius Baer continues to make excellent progress in the growth markets and if current regional trends continue, more than half of the Group’s AuM would stem from clients resident in the growth markets by 2015, up from over one third today. The Group’s business with clients in the Middle East was further strengthened by the recent addition of a strong team of experienced relationship managers, while the provision of wealth management services to Israeli clients was enhanced through the opening of a new representative office in Tel Aviv in March 2012.
Whereas the asset-based component of the gross margin remained largely stable compared to 2011, the transaction and trading-based components decreased, reflecting reduced levels of client activity, especially in equities and foreign exchange (FX). This development is driven by subdued risk appetite given the uncertain market outlook, as well as diminished FX volatility. As a result, while the gross margin improved from the lows reached in the last quarter of 2011, it remained slightly below 100 basis points, beneath the level achieved for 2011 overall. As a result of the year-to-date operating income developments, and despite an improvement in the cost base in the first four months of 2012 compared to the same period in 2011, the cost/income ratio increased to slightly above 70%. A number of steps have been initiated with the aim to bring the cost/income ratio down in the course of the year.
Julius Baer remains very well capitalised. At the end of March 2012, the Group’s BIS total capital ratio stood at 24.1% and the BIS tier 1 ratio at 21.8%, well above the targeted floors of 16% and 12%, respectively.
Julius Baer Group’s detailed financial results for the first half of 2012 will be published on 23 July 2012.