Swiss private bank Julius Baer has announced that it will cut 2% of its headcount by the end of 2019, in order to bring its spendings under control.
Julius Baer will lower expenses by CHF100m by further enhancing market focus and related prioritisation of resource allocation; leveraging automation and digitalisation; and applying stricter performance management.
The bank reported that its full year 2018 IFRS net profit attributable to shareholders grew by 4% to CHF735m and IFRS earnings per share rose by 4% to CHF3.37. Adjusted net profit for the Group increased slightly to CHF810m from CHF806m. Adjusted EPS attributable to shareholders was up 2% to CHF3.72.
Bernhard Hodler, chief executive officer 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", he added.
The group's Assets under management was declined by 2%, or CHF6bn, to CHF382bn. AuM were supported by net new money of CHF17bn and a net acquisition impact of CHF3bn.
However, these positive contributions were more than offset by negative market performance of CHF22bn, following the sharp decline in global stock markets in the second half of 2018, and a negative currency impact of CHF5bn, driven mainly by the decline in the euro.
Operating income rose to CHF 3,368m. With an increase of 4%, it grew less than monthly average AuM (up 9% to CHF 394bn), resulting in a decline of 4 bp in the gross margin to 86 bp.
Adjusted cost/income ratio was at 70.6% and pre-tax margin at 25 bp - both impacted by weaker gross margin and additional legal and restructuring expense items. BIS CET1 capital ratio 12.8% and BIS total capital ratio 18.7%, well above minimum regulatory requirements and Group's own floors.
The Board of Directors of Julius Baer will also propose an ordinary dividend of CHF 1.50 per share for the financial year 2018, representing the fifth consecutive increase and a rise of 7% from 2017.