Interim Management Statement for the first ten months of 2017 (1)
Assets under management up 17% to record CHF 393 billion – Continued strong net new money momentum – Further improvement in cost/income ratio (2) and capital ratios
Zurich, 20 November 2017 – At the end of October 2017, Julius Baer Group’s assets under management (AuM) had grown to a record CHF 393 billion, a year-to-date increase of CHF 57 billion, or 17%. The rise in AuM was driven by significant net inflows, continued positive market performance, and the strengthening of the euro relative to the Swiss franc.
Net inflows above target range
Supported by a significant contribution from relationship managers who joined in the last two years, annualised net new money growth remained above the 4–6% target range. Momentum was particularly strong in emerging markets and the Asia Pacific region.
Summer slowdown in client trading volumes
The gross margin for the first ten months declined to just below 90 basis points (bp), mainly on the back of a decline in client FX trading income since the end of June. For the first half of the year, the gross margin was slightly under 92 bp.
Improving cost/income ratio (2) trend
In line with the Group’s full-year guidance, the cost/income ratio (2) continued to improve towards the 64–68% medium-term target range. For the first ten months, the cost/income ratio (2) was below 69%, compared to 69.1% reported in the first half of the year. The cost/income ratio (2) is expected to improve into the medium-term target range in 2018. As usual, this guidance assumes no significant deterioration in market conditions.
Solid capital position
The Group’s BIS total capital ratio continued to strengthen, and at the end of October 2017 had reached 21.8% (fully applied 21.2%). The BIS CET1 capital ratio was at 16.4% (fully applied 13.4%). Both capital ratios are well above the Group’s own floors of 15% and 11%, and significantly above the regulatory minimums of 12.2% and 8%. The strengthening of the total capital ratio was partly attributable to the successful placement of USD 300 million of perpetual non-cumulative high-trigger Additional Tier 1 (AT1) securities in September 2017. The AT1 securities carry a coupon of 4.75%, which represents the lowest coupon achieved so far for a USD AT1 transaction from a European bank.
2017 full-year results
Julius Baer Group’s detailed financial results for 2017 will be published on 31 January 2018.
Please note the disclaimer regarding forward-looking statements in the attached media release PDF.
(1) Based on unaudited management accounts
(2) Excluding integration and restructuring expenses, the amortisation of intangible assets related to acquisitions or divestments, and valuation allowances, provisions and losses