Julius Baer reports AUM hike, as SFAMA reports broader market drop MoM

Swiss private banking group Julius Baer has reported its assets under management reached a new high by the end of October of CFH327bn – bucking the broader industry trend reported by the Swiss Fund and Asset Management Association of investment fund AUM falling 1.2% month on month to CHF903bn.

The industry data points to net withdrawals “from nearly every fund category, with bond funds hardest hit,” according to SFAMA managing director Markus Fuchs. Total net outflows from the Swiss investment fund industry across all sectors was about CHF6bn through the month. Gross outflows were about CHF10.5bn.

In contrast, Julius Baer reports in its latest interim statement that its assets are up 9% or CHF27bn since the end of 2015 – boosted by the completion of its acquisitions of Kairos Investment Management in April and Commerzbank International in Luxembourg in July. Together these added some CHF12bn of AUM.

The manager said its net new inflows were being added at an annualised rate of 4%, based on net inflows from all regions bar Latin America year-to-date. This rate is forecast to rise to 4%-6% in 2017.

As a private banking organisation, it also said that it has continued to add senior private bankers “attracted by Julius Baer’s pure private banking busines model”. Along with the cost of investments – such as the aquisition of Kairos – the group’s key cost/income ratio has been reported as coming in over the first ten months of 2016 just below the 64%-68% target over the medium term. However, the interim statement pointed to recovery in margins, and the group is sticking with its full-year target ratio of 68%-69%.

“As this year’s investments in growth start delivering the envisaged improvements in productivity, the cost/income ratio is expected to normalise towards and into the 64-68% target range over the next two years,” the bank said.

The capitalisation ratios meanwhile remain well in excess of regulatory minimums. Julius Baer reported a sale of SGD325m worth of perpetual tier 1 subordinated bonds through October, which left it with a CET tier 1 capital ratio of 16.2%, as per the Bank for International Settlements definition, which is up from 15.9% as at the end of June this year. The minimum regulatory requirement is 8%, meaning the bank retains a significant capitalisation cushion.

Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 16 years he has been based in London writing about funds and investments . From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope.

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