Assets under management at record CHF 356 billion – Positive net new money momentum – Improving cost/income ratio (2) trend
Zurich, 22 May 2017 – At the end of April 2017, Julius Baer Group’s assets under management (AuM) had grown to a record CHF 356 billion, a year-to-date increase of CHF 20 billion, or 6%. The rise in AuM came on the back of significant net inflows and market performance, partly offset by the weakening of the US dollar relative to the Swiss franc.
Last year’s significant investments in attracting senior relationship managers (RMs) started to accelerate net inflows to the middle of the 4-6% target range (annualised).
Recovery in gross margin
Compared to the second half of 2016, the gross margin recovered by 2 bps to close to 90 bps. This increase was driven mainly by broadly equal improvements in the client-activity-driven and asset-based components of net commission and fee income.
Improving cost/income ratio (2) trend
Whilst the cost base now includes the full weight of last year’s accelerated investments in RM hiring, the resulting increase in net new money and hence operating income drove an initial decrease in the cost/income ratio (2) to 71%. This represents a first improvement from the 73% realised in the second half of 2016. In line with the guidance provided earlier, and as the anticipated incremental revenue benefits are expected to continue to build up, the cost/income ratio (2) is expected to normalise close to the upper end of the 64-68% medium-term target range in 2017, and into the range in 2018. As usual, this guidance assumes no significant deterioration in market conditions from current levels.
Solid capital position
At the end of April 2017, the Group’s BIS total capital ratio stood at 17.8% and its BIS CET1 capital ratio at 14.2%, above the Group’s own floors of 15% and 11%, respectively, and significantly above the regulatory minimums of 12.2% and 8%, respectively. On a Basel III fully-applied basis, the capital ratios improved by more than half a percentage point from their end-of-2016 levels.
2017 half-year results
Julius Baer Group’s detailed financial results for the first half of 2017 will be published on 24 July 2017.
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