Julius Baer Group: 2008 full-year results

Friday, 06. February 2009 07:00
Julius Baer achieved a 2008 net profit* of CHF 852 million, a good
result given the difficult business environment - With a 13.6% BIS
Tier 1 ratio, Julius Baer continues to enjoy a strong capital base -
Record inflows in Private Banking (CHF +17bn), significant outflows
in Asset Management (CHF -27bn)

* Benefiting from its exclusive focus on wealth management, Julius
Baer's 2008 net profit* decreased by only one quarter to CHF 852
million compared to the peak year 2007. All businesses contributed
positively to this result.

* Total client assets amounted to CHF 338 billion. Based on the
extraordinary, negative market environment and the strong
appreciation of the Swiss franc, the Group's assets under
management declined by one third to CHF 275 billion at the end of
2008. Assets under custody amounted to CHF 63 billion.

* Net new money in Bank Julius Baer was CHF 22 billion, with Private
Banking contributing a record CHF 17 billion. Net outflows in Asset
Management amounted to CHF 27 billion as the asset management
industry faced a particularly challenging environment.

* The Julius Baer Group continues to enjoy a solid balance sheet
with low leverage and a very strong capital base as expressed by
its BIS Tier 1 ratio of 13.6% at year-end.

* Based on this result and the strong capital base, the Board of
Directors proposes to the Ordinary Annual General Meeting on 8
April 2009 an unchanged dividend of CHF 0.50 per registered share.

* The share buyback programme 2008-2010 of up to CHF 2 billion as
announced in 2007 will be continued, taking account of the targeted
BIS Tier 1 ratio and the market environment.

* As of year-end 2008, the former Investment Products division was
realigned to further sharpen the private client focus of Bank
Julius Baer by combining all client-oriented wealth and
relationship management functions while reintegrating Julius Baer
Asset Management Europe, comprising the Julius Baer branded
investment fund and institutional mandate business, into the
segment Asset Management. The segment reporting has been adjusted
accordingly.

Total client assets of the Julius Baer Group amounted to CHF 338
billion at the end of 2008. Assets under management totalled CHF 275
billion, down 32% from CHF 405 billion at the end of 2007. This
decrease is almost entirely attributable to the negative price
development of most asset classes of CHF 94 billion, most pronounced
in the second half, and the negative currency impact of CHF 31
billion from the strengthening of the Swiss franc against most
currencies, in the last few days of the year in particular. Net
outflows amounted to CHF 5 billion in 2008. Assets under custody were
at CHF 63 billion after CHF 68 billion in 2007, having attracted CHF
11 billion in net new money.

Group operating income fell by 15% to CHF 2,939 million compared to
2007. Net fee and commission income declined by 20% to CHF 2,201
million on the back of lower average asset levels, the changed asset
and client mix, and subdued private client activity in Private
Banking, most pronounced in the second half. Net interest income rose
by 48% to CHF 479 million thanks to higher average deposit levels,
increased average lending to private clients over the year, and
higher interest margins. On the back of strong client-driven foreign
exchange trading activities, overall net trading income increased by
18% to CHF 353 million.

Group operating expenses declined by 7% to CHF 1,857 million, partly
helped by the strengthening of the Swiss franc. Despite the overall
increase of staff by 6% to 4,335, personnel expenses were cut by 9%
to CHF 1,276 million on the back of lowered performance-related
compensation, which decreased proportionally with the decline in the
pre-bonus profit. General expenses, including valuation adjustments,
provisions and losses, were down 4% at CHF 527 million in spite of
higher expenses due to the expanded network of Bank Julius Baer. As a
consequence, the cost/income ratio at Group level increased to 61.6%
in 2008 from 56.7% in 2007.

Accordingly, profit before taxes for the Group declined by 25% to CHF
1,082 million year on year. Taxes amounted to CHF 230 million,
representing an almost unchanged effective tax rate of 21.2%. Net
profit* was therefore down by 25% to CHF 852 million. EPS showed a
smaller decline of 22% to CHF 4.12 due to the share buyback
programme.

Balance sheet remains solid - BIS Tier 1 ratio at 13.6%

Total assets declined slightly by CHF 0.7 billion to CHF 46.2 billion
at year-end, partly driven by the appreciation of the Swiss franc.
Client deposits went up by CHF 0.9 billion to CHF 25.3 billion as
clients moved assets into cash and cash equivalent products
especially following the market turmoil in September. Lombard lending
and mortgages granted to clients (as part of the line item loans to
customers) ended at the same level as 2007, resulting in a very
comfortable loan-to-deposit ratio of 0.38, underlining the sound
liquidity situation of the Group. Total equity was up by 2.4% to CHF
6.6 billion and BIS Tier 1 capital grew by 8% to CHF 2.1 billion
compared to the end of 2007. With a BIS Tier 1 ratio of 13.6% under
Basel II the Julius Baer Group continues to enjoy a very strong
capital base.

In 2008, Julius Baer bought back 4,403,500 own shares in the amount
of CHF 299 million. The share buyback programme 2008-2010 of up to
CHF 2 billion as announced in 2007 will be continued, taking account
of the targeted BIS Tier 1 ratio of 12% as well as the market
environment.

As of the end of 2008, the business activities of the former
Investment Products division were realigned as follows: (a) private
client discretionary and advisory business as well as all research,
trust and tax functions providing private banking services and
products remain within Bank Julius Baer to better serve private
clients, while (b) Julius Baer Asset Management Europe, comprising
all Julius Baer branded investment fund and institutional mandate
businesses, has been transferred to the Asset Management segment. The
segment reporting has been adjusted accordingly.

Bank Julius Baer continues to attract substantial net new money

Bank Julius Baer, as organised in the new segment structure, managed
assets of CHF 159 billion at the end of 2008, of which CHF 128
billion were attributable to our Private Banking business and CHF 31
billion to our Private Label Funds business. Very favourable net new
money inflows totalling CHF 22 billion could not compensate the
negative market and currency performance of CHF 44 billion and CHF 12
billion, respectively, resulting in an 18% decline in assets year on
year. Net new money inflows in our Private Banking business
maintained the pace witnessed in the first semester, totalling a
record CHF 17 billion for the year. All geographic regions
contributed positively, with growth markets and core markets
contributing about equally. The Private Label Funds business
continued to expand, attracting net new money of CHF 5 billion.

Bank Julius Baer's operating income decreased by only a modest 2% to
CHF 1,678 million in the reporting period. Lower fee and commission
income as a result of decreased average asset levels and subdued
client activity was partly offset by strongly higher net interest
income, driven by increased average levels of lending to private
clients and higher average deposits as well as margins, and rising
net trading income, mainly from foreign exchange. Despite reduced
performance-related compensation, operating expenses increased by 4%
to CHF 1,049 million as a result of front-related hirings (increasing
the number of employees by 7% to 3,009) and slightly higher general
expenses. As a consequence, profit before taxes declined by 10% to
CHF 629 million year on year. The cost/income ratio increased to
60.6% from 58.0%, and the pre-tax margin was down to 34.7 from 37.9
basis points a year ago.

Asset Management faces outflows despite strong relative performance
at GAM and Artio Global

Under the new segment structure, a total of CHF 116 billion in assets
was managed by Asset Management's three specialised units at the end
of 2008: CHF 42 billion by GAM, CHF 48 billion by Artio Global,
Julius Baer's US asset management business, and CHF 26 billion by the
Julius Baer Asset Management Europe. The segment's overall decline of
CHF 96 billion was attributable to adverse market performance of
CHF 50 billion, net outflows of CHF 27 billion, attributable to GAM
and Julius Baer Asset Management Europe, and adverse translation
effects into the reporting currency, the Swiss franc, of CHF 19
billion.

The asset management industry faced a challenging environment,
particularly following market turmoil in September, with private and
retail clients effectively shunning any perceived risk asset.
Managing mostly private client assets, GAM experienced considerable
net outflows, especially in the fourth quarter, despite the fact that
its core products meaningfully outperformed their peer groups and
relevant indices in 2008. Thanks to its sophisticated risk management
and manager due diligence processes, GAM avoided the market's major
casualties and, significantly, maintained client liquidity, thereby
positioning the firm to benefit strongly upon renewed client demand.
At Artio Global, although second half client flows turned negative,
total net inflows remained positive year to date, supported by the
strength of its large institutional client base. Artio Global's
international equity funds continued their outstanding long-term
track record and in 2008 again outperformed their relevant indices.
Julius Baer still intends to IPO Artio Global when market conditions
allow. Julius Baer Asset Management Europe could not escape the
general industry trend and experienced net outflows.

Segment operating income decreased by 24% to CHF 1,253 million year
on year, mainly as a result of the lower average asset base and in
the absence of meaningful performance fees. Operating expenses were
16% lower at CHF 726 million, reflecting cost reductions, lower
performance-related payments as well as the positive translation
effects from our largely USD and GBP denominated cost base. All in
all, profit before taxes fell by 33% to CHF 527 million. The
cost/income ratio increased to 57.1% from 52.2%, and the pre-tax
margin was lower at 30.9 basis points after 37.5 basis points a year
ago.

Unchanged dividend proposed

Based on the good result and the strong capitalisation, the Board of
Directors proposes to the Annual General Meeting on 8 April 2009 an
unchanged dividend of CHF 0.50 per registered share. As announced
earlier, Leonhard H. Fischer, Co-Chief Executive Officer and member
of the Board of Directors of RHJ International as well as former
Chief Executive of the Winterthur Group and member of the Executive
Board of the Credit Suisse Group, will be proposed for election as a
new member of the Board of Directors.



The results conference will be webcast at 9:30 am (CET). All
documents (presentation, Business Review 2008, 2008 IFRS Annual
Report and press release) will be available as of 7:00 am (CET) at
www.juliusbaer.com.

Contacts: Media Relations: Tel. +41 58 888 5777, Investor Relations:
Tel. +41 58 888 5256

The Interim Management Statement will be released on 12 May 2009 and
the 2009 first-half results on 22 July 2009.

About Julius Baer
The Julius Baer Group, founded in 1890, is the leading dedicated
wealth manager in Switzerland. It concentrates exclusively on private
banking and asset management for private and institutional clients.
Julius Baer's total client assets amounted to CHF 338 billion at the
end of 2008, with assets under management accounting for CHF 275
billion. Bank Julius Baer, GAM and Artio Global Investors are the key
brands of Julius Baer Holding Ltd., whose shares are listed on the
SIX Swiss Exchange and form part of the Swiss Market Index (SMI),
which comprises the 20 largest and most liquid Swiss stocks.
Julius Baer employs a staff of over 4,000 in more than 20 countries
and 40 locations, including Zurich (head office), Buenos Aires,
Dubai, Frankfurt, Geneva, Hong Kong, London, Lugano, Milan, Moscow,
New York, Singapore and Tokyo. For more information visit our website
at www.juliusbaer.com.

* Net profit for the shareholders of Julius Baer Holding Ltd.
excluding integration and restructuring expenses as well as the
amortisation of intangible assets. Including these positions, the
shareholders' net profit for 2008 amounted to CHF 661 million, after
CHF 940 million for 2007.


This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.

View document

View document

View document
Related Links: 
Author:
Hugin
Copyright GlobeNewswire, Inc. 2016. All rights reserved.
You can register yourself on the website to receive press releases directly via e-mail to your own e-mail account.