Published - July 24th, 2023 @ 12:28 PM (GMT+2)

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Profit Growth in H1 2023 at Julius Baer

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Zurich's premier private bank, Julius Baer, experienced a net profit hike of 18% in the first half of 2023, totaling 531 million Swiss francs ($613.23 million), a notable surge from last year's 451 million Swiss francs. These profits were bolstered by augmented assets under management and a rise in funds from affluent clients.

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Despite missing the projected net profit of 557 million francs, Julius Baer still recorded an adjusted net profit of 541 million francs after factoring out operating expenses related to acquisitions or divestments. The results reflect a promising financial performance, with increased assets under management up to 441 billion francs. This climb was partially driven by an influx of 7.1 billion francs in new money from high net worth individuals.

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The recent turmoil at Credit Suisse has been predicted to be a significant catalyst for Julius Baer's growth in the coming years. According to Deutsche Bank Research analyst, Benjamin Goy, with the forecasted rise in hiring relationship managers, net new money is expected to exceed the historical average from the second half of 2023 onwards.

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Positive Impact of Credit Suisse's Takeover
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Following the near-collapse and subsequent takeover of Credit Suisse by UBS in March, Julius Baer managed to pull in more than 9.2bn Swiss francs ($10.6bn) in new funds. Despite unstable markets and reduced client borrowing, these inflows helped propel the bank's total assets under management higher by 17bn Swiss francs to 441bn Swiss francs as of June end.

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Strategic Hiring and Growth Forecast
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The Swiss bank has proactively seized opportunities in the current banking landscape. They hired 57 relationship managers in recent months, many of whom were from Credit Suisse and UBS. As a result, the bank forecasts a period of solid growth despite increased staff cuts following the merger of the two banks.

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The rise in interest rates has also played a significant role in Julius Baer's profits, with income from interest on client loans soaring by over 146% in the last six months to 841mn Swiss francs. With a strong balance sheet and a core equity tier-one capital ratio of 15.5%, up from 14% at the end of 2022, the bank plans to continue growing organically while exploring strategic opportunities.

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Traditional Banking Gains Favor Amid Crisis
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Given the recent challenges and complexities in Swiss banking due to the crisis at Credit Suisse and UBS, wealthy clients are predicted to gravitate towards traditional lenders like Julius Baer. As the country's most prominent "pure-play" private bank, Julius Baer caters exclusively to wealthy individuals' account and investment needs, providing a conservative banking model that has proven advantageous amid current market volatility.

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