Operating income declined by 5%, driven by 3% lower average assets under management and gross margins contracting slightly to 111 basis points. Operating expenses were reduced by a further 8%, resulting in the adjusted net profit increasing by 7% to CHF 473 million.
Total client assets increased by 25% to CHF 241 billion. Assets under management of private clients grew by 19% to CHF 154 billion, on the back of recovering markets and net inflows. Assets under custody rose by 37% to CHF 87 billion.
Net new money inflows from private clients were CHF 5 billion or 4%. Overall continued healthy inflows – especially from emerging markets and in particular Asia – were partly offset by outflows due to the Italian tax amnesty and the phased exit from the US business.
The Julius Baer Group continues to enjoy a very strong capital base as expressed by its BIS tier 1 ratio of 24.2% at year-end and is well positioned to be a driving force in the industry consolidation.
Based on this result and in adhering to the payout policy of the former Julius Baer Holding Ltd., the Board of Directors will propose to the Ordinary Annual General Meeting on 8 April 2010 a dividend of CHF 0.40 per registered share.
With the separation of the private banking and asset management businesses of the former Julius Baer Holding Ltd., 2009 was a transformational year for Julius Baer. Thus by refocusing on its core strengths – providing private banking and investment advisory services for private clients, family offices and external asset managers based on a truly open product platform – Julius Baer was established as the leading Swiss private banking group. This move, in anticipation of some of the regulatory trends currently being discussed publicly, was very well received by the Group’s clients. It reinforces Julius Baer’s commitment to private banking excellence in keeping with its rich Swiss heritage dating back to 1890.
Boris F.J. Collardi, Chief Executive Officer of Julius Baer Group Ltd., said: “I am very pleased with our Group’s performance in a year of significant strategic repositioning and given the demanding financial markets. Thanks to Julius Baer’s very sound financial base, clear strategic direction and comprehensive footprint in Switzerland and abroad, we are well positioned to cope with what we perceive is a fundamentally changing business environment facing our industry. Our priorities therefore remain unchanged: to capture further growth and to capitalise on potential market opportunities.”
Total client assets amounted to CHF 241 billion at the end of 2009. Assets under management increased by 19% to CHF 154 billion compared with the CHF 129 billion at the end of 2008. This increase was the result of a positive market performance impact of CHF 20 billion driven by positive returns for most asset classes during 2009, net new money of CHF 5 billion, the acquisition of Alpha SIM in Milan, which added CHF 0.6 billion, and a minor negative currency impact of CHF 0.7 billion. Net new money development, within the targeted 4–6% range, was the result of continued strong inflows from emerging markets and in particular Asia, being partly offset by outflows due to the Italian tax amnesty and the announced phased exit from the US business. Of total assets that were declared by clients taking advantage of the Italian tax amnesty, some 60% remained with Julius Baer. The reported assets under management do not include the CHF 14 billion year-end assets under management resulting from the acquisition of ING Bank (Switzerland) Ltd, which closed in January 2010. Assets under custody ended the year at CHF 87 billion after CHF 64 billion at the end of 2008, an increase of 37%, reflecting positive market performance as well as CHF 13 billion in net new custody assets.
Operating income declined by 5% to CHF 1,586 million, driven by 3% lower average assets under management and a slightly lower gross margin of 111 basis points. Net fee and commission income declined by 15% to CHF 819 million on the back of decreased average asset levels, a lower level of actively managed assets, and a changed asset mix based on private clients’ more conservative investment stance. Net interest income rose by 3% to CHF 467 million, the result of higher average deposit levels, decreased average lending to private clients, and net interest margins which were relatively high in the first half of 2009 but, as expected, contracted in the second half of the year to more normal levels. While average lending to private clients decreased year on year, the second half of 2009 saw a turnaround in loan volumes compared with the first half. Net trading income declined by 13% to CHF 299 million as the decrease in client-driven foreign exchange trading volumes was only partly offset by an increase in client-driven fixed income trading. Other ordinary results, in 2008 negatively impacted by market-related position squaring in the investment portfolio, turned positive again.
Operating expenses were managed down a further 8% to CHF 1,026 million. Notwithstanding the continued investments in growth, in particular through the further expansion of the base of relationship managers by net 48 to 667, the increase in the overall number of employees remained limited to 1%, taking the total staff level to 3,078. Despite this increase, personnel expenses were reduced by 8% to CHF 683 million, mainly on the back of lowered performance-related compensation and a decrease in share-based payments. General expenses, including valuation adjustments, provisions and losses, were down by 13% at CHF 296 million. As a consequence, the cost/income ratio for 2009 improved from 65.3% to 63.1%.
Accordingly, profit before taxes increased by 3% to CHF 560 million, representing a pre-tax margin of 39 basis points. Income taxes declined to CHF 87 million, representing an effective tax rate of 16%, which compares to 18% in 2008. As a result, the adjusted net profit improved by 7% to CHF 473 million, and earnings per share came to CHF 2.29.
BIS tier 1 ratio at 24.2% – Balance sheet remains solid
Total assets were unchanged at CHF 42.7 billion. Client deposits went up by CHF 1.7 billion to CHF 27.3 billion, and lombard lending and mortgages increased by CHF 0.6 billion to CHF 10.4 billion, thus resulting in a continued conservative loan-to-deposit ratio of 0.38, underlining the sound liquidity situation of the Group. Total equity was up by 20% to CHF 4.2 billion, and BIS tier 1 capital grew to CHF 2.7 billion. With a strong BIS tier 1 ratio of 24.2% the Julius Baer Group continues to enjoy a very solid capital base and is well positioned to be a driving force in the industry consolidation.
Based on the pleasing result and in adhering to the payout policy of the former Julius Baer Holding Ltd., the Board of Directors will propose to the Ordinary Annual General Meeting on 8 April 2010 a dividend of CHF 0.40 per registered share.
The results conference will be webcast at 9:30 a.m. (CET). All documents (presentation, Business Review 2009, 2009 IFRS Annual Report and press release) will be available as of 7:15 a.m. (CET) at www.juliusbaer.com.
Media Relations: Tel. +41 58 888 5777,
Investor Relations: Tel. +41 58 888 5256
|8 April 2010:|
Ordinary Annual General Meeting, Zurich
|12 April 2010:|
|15 April 2010:|
|16 April 2010:|
|11 May 2010:|
Interim Management Statement
|21 July 2010:|
Release of 2010 first half-year results, Zurich
(1)Adjusted financial figures representing Julius Baer Group Ltd. as if it had already existed on 1 January 2008. For further details, see page 3. Unadjusted, the net profit attributable to shareholders was CHF 389 million in 2009, after CHF 357 million in 2008, an increase of 9%.