Swiss investment bank Julius Baer targets £77m of cuts as profit growth slows
Swiss bank Julius Baer launched a SFr 100m (£76.6m) cost-cutting programme today as profit growth slowed last year.
The figures
Switzerland’s third largest bank saw net profit for the full year 2018 grow four per cent to SFr 735m, compared to a 14 per cent growth rate in 2017, missing a Reuters poll of analyst expectations of SFR 772m by a wide margin.
Assets under management slipped two per cent to SFr 382bn, with net new money growing at 4.5 per cent year on year to add SFr 17bn, towards the lower end of the bank’s 4-6 per cent target range.
Including assets under custody of SFr 62bn, total client assets fell three per cent to SFr 444 bn.
Baer still upped its dividend to SFr 1.5 compared to SFr 1.4 in 2017.
The bank left its net new money target unchanged for the coming year, but lowered its cost-to-income ratio goal and pre-tax margin goal.
Why it’s interesting
Baer blamed global stock markets’ sharp decline in the second half of last year for its assets’ negative performance, with boss Bernard Hodler calling it “an environment that was challenging for the entire industry”.
A decline in the value of the euro also cost Baer SFr 5bn.
The bank outlined a SFR 100m cost reduction scheme to make up for the slowing growth, saying strategic investments won’t suffer as a result.
It also pointed to “strong contributions” in new money from the UK, Monaco, Germany, Luxembourg and Spain, as well as Asia and the Middle East, where the United Arab Emirates was the source of inflows.
However, lowering its targets give an indication that the economic challenges are not over for Baer as it prepares for 2019.
What Julius Baer said
Chief executive Bernhard Hodler said: “Julius Baer ended 2018 with stable profit and robust net new money growth − and we did so in an environment that was challenging for the entire industry.
“We continue to make strategic growth investments, and have initiated a structural cost reduction programme to absorb revenue fluctuations from potential market headwinds over the short to medium term.
“Our updated financial targets underscore our long-term ambition to pursue sustainable and profitable growth, and to deliver attractive capital returns to our shareholders.
“We will follow a clear strategy centered on smarter market coverage, holistic and personalised advice, and technology transformation, aiming above all to enhance client experience, improve efficiency and increase revenues.”