JULIUS Baer Group said profit fell in the first half of the year even as clients began returning funds, in a sign of an uneven recovery from last year’s Signa real estate scandal.
The Zurich-based bank, which appointed Goldman Sachs Group’s Stefan Bollinger as its new chief executive this week, said on Thursday (Jul 25) that net inflows came in at 3.7 billion Swiss francs (S$5.6 billion) in the six months to June. Net income in the period fell 15 per cent from a year earlier.
The recovery in inflows comes after some clients began pulling funds around the turn of the year, following the revelation that the bank had run up a US$700 million exposure to bankrupt property mogul Rene Benko. That led to a steep profit cut for last year and the departure of previous CEO Philipp Rickenbacher in February.
“We had a difficult start into the year,” interim CEO Nic Dreckmann said in an interview with Bloomberg Television’s Anna Edwards and Kriti Gupta. “Since then we have had a momentum. All the way to June, inflows were north of 3 per cent in all of our major markets. Momentum has been picking up.”
The long-awaited appointment of Bollinger ended a months-long search for an external candidate to give fresh direction to the firm. Even so, investors will likely have to wait until early 2025 for signs of intent from the incoming CEO, as Bollinger is only due to take up his post by Feb 1.
Assets under management came in at 474 billion Swiss francs, up 11 per cent from the end of 2023, driven by rising stock markets.
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Private debt
Julius Baer has said that they expect the wind-down of the private debt business at the heart of the Signa collapse to largely be completed by 2026. That portfolio declined to about 600 million Swiss francs in the first half of 2024 from around 800 million francs at the end of 2023.
Net interest income in the first half slumped 52 per cent to 223 million Swiss francs, driven largely by clients shifting out of current accounts to time and call deposits, the bank said. At the same time, commission and fee income grew 14 per cent. The bank said it was increasing its cost-reduction target for 2023 to 2025 by 10 million Swiss francs.
On inflows, the bank said it saw strong new money arriving from Europe, as well as India, Singapore and the United Arab Emirates. Net new money was down by almost half on the same period last year.
Analysts have focused on the leadership gap at the firm since the Signa blow-up and the departure of Rickenbacher in February. The lead time for Bollinger’s arrival means the bank risks being rudderless for most of 2024.
“It appears that Julius Baer is in a bit of strategic limbo until the new CEO arrives,” said Anke Reingen, an analyst at RBC Capital Markets in London. BLOOMBERG
