At the end of April 2018, Julius Baer Group’s assets under management (AuM) had grown to CHF401bn, a year-to-date increase of CHF13bn, or 3%, crossing above the CHF400bn mark for the first time. The rise in AuM came on the back of continued net inflows as well as a positive currency impact, the latter mainly following the strengthening of the US dollar in April. Market performance was essentially flat.
Net new money inflows above 5%
Net inflow momentum remained robust, resulting in an annualised net new money pace above 5%, inside the 4–6% target range. Particularly strong inflows were recorded from clients domiciled in Europe, Switzerland and Asia, with continued substantial contributions through relationship managers who joined in 2016 and 2017.
Gross margin improvement driven by step-up in client activity
Compared to the second half of 2017, the gross margin improved by 5 basis points to 93 basis points. This increase was driven mainly by a step-up in client activity, especially in January and to a lesser extent in March, bolstering both net commission and fee income and net trading income.
Cost/income ratio inside target range
The cost/income ratio improved further and, at just below 67%, it was comfortably inside the 64–68% medium-term target range. This positive trend reflects continued growth in client assets at a stronger gross margin, with revenue growth substantially outpacing the cost impact from ongoing investments in technology and the successful recruitment of senior relationship managers.
Solid capital position
Despite the impact from the acquisition of the residual 20% stake in Kairos in January 2018, the Group’s BIS CET1 capital ratio remained stable at 13.3% (compared to a fully-applied BIS CET1 capital ratio of 13.5% at the end of 2017). Following the redemption in March 2018 of the CHF 250 million of perpetual Tier 1 bonds issued on 18 September 2012, the BIS total capital ratio stood at 19.8% (compared to a fully-applied BIS total capital ratio of 21.2% at the end of 2017).
Successful go-live of new core banking platform in Asia
Julius Baer’s new core banking system in Asia was introduced successfully at the end of March 2018. The platform, based on Temenos T24 banking software, has been implemented in the two Asian booking centres of Singapore and Hong Kong, laying the operational and technical foundation for Julius Baer’s further growth in the region. After last year’s integration of the T24 platform in Luxembourg into the Group’s global IT environment, this represents the second major step in Julius Baer’s effort to harmonise its platforms around the world.