In the ten month reporting period, Julius Baer was effective in counteracting the market-driven decline in assets under management with a meaningful improvement in its gross margin.
Article continues below
Supported further by the diligent execution of the revenue and cost measures in the first two years of the current strategic cycle, the cost/income ratio, pre-tax margin and return on CET1 capital (RoCET1) targets set for 2022 remain well within reach.
The clear improvement in net new money inflows, which began towards the end of the first half of 2022, continued throughout the July–October 2022 period. Julius Baer continues to be solidly capitalised and currently expects to complete the ongoing share buyback programme, as planned, by the end of February 2023.
Thanks to a strong improvement in the July–October period to close to 91 basis points (bp), the gross margin for the first ten months of 2022 rose to 85 bp, an increase of 3 bp from the 82 bp reported for the full year 2021.
The gross margin contribution from net interest income and net income from financial instruments measured at FVTPL rose significantly on the back of higher interest rates.
This development more than offset the gross margin impact from client activity which, while continuing to normalise from the lows seen in May–June 2022, did not reach the volumes reported for full-year 2021.
The improvement in net inflows, which started towards the end of the first half of the year, strengthened in the subsequent four months, despite some further client deleveraging.
Net new money of CHF 4.1 billion since the end of June 2022 (3% annualised) more than compensated for the CHF 1.1 billion of net outflows recorded in the first half of 2022, taking the year-to-date net new money inflow result to CHF 3 billion.
Compared to year-end 2021, assets under management (AuM) decreased by CHF 52 billion, or 11%, to CHF 429 billion on 31 October 2022, largely driven by the declines in global stock and bond markets (CHF 67 billion impact) and, to a small extent (CHF 7 billion), by the minor corporate divestments executed in the year to date.
This development was partly compensated by a positive currency impact (CHF 19 billion), mainly from the year-to-date strengthening of the US dollar relative to the Swiss franc, and by the aforementioned recovery in net new money inflows (CHF 3 billion). ■