Julius Baer sees 9M profitability rise on client trading, cost cuts

Credit: REUTERS/Arnd Wiegmann

Swiss wealth manager Julius Baer on Monday flagged an improvement in profitability for the first nine months of 2020 as client activity increased and it cut costs, while rising client inflows helped the bank grow net new money by nearly 4%.

Julius Baer posts Q3 recovery in managed assets; net new money rise

9M gross margin 89 basis points vs 92 basis points for FY 2019

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Adds detail from statement, background

ZURICH, Oct 19 (Reuters) - Swiss wealth manager Julius Baer BAER.S on Monday flagged an improvement in profitability for the first nine months of 2020 as client activity increased and it cut costs, while rising client inflows helped the bank grow net new money by nearly 4%.

"Julius Baer's strong performance in the first half of 2020 continued in the third quarter of 2020," Switzerland's third-largest listed lender said in a statement. "Supported by ongoing active client engagement, operating income was considerably higher in the first nine months of 2020 than in the same period a year ago."

Fresh client inflows and a continued recovery in stock markets helped the Zurich-based lender stem a fall in managed assets unleashed by the coronavirus pandemic, with assets under management rising 3% to 413 billion Swiss francs ($451.12 billion) since June.

Shares were indicated up 2.1% in pre-market trading activity.

The bank -- which does not report profits in its nine-month results -- had previously seen a 43% jump in half-year net profit to 491 million Swiss francs, as a pick up in client activity more than offset a drop in lending and a hit from falling U.S. interest rates.

On Monday it said gross margins in the third quarter had remained consistent with levels seen during May and June, helped by high levels of client activity despite slower loan growth.

Its adjusted cost-income ratio stood at 66.1% through September, an improvement from the 71.1% posted for full-year 2019.

The bank said it would take another 177 million euro ($207 million) goodwill charge from its ailing Italian unit Kairos in its full-year results, and would be making a number of investment managers minority shareholders of the Italian asset and wealth manager. Julius Baer will retain a 70% stake.

($1 = 0.8542 euros)

($1 = 0.9155 Swiss francs)

(Reporting by Brenna Hughes Neghaiwi, editing by John Miller)

((brenna.neghaiwi@thomsonreuters.com; +41 58 306 77 35;))

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