Julius Baer Group has provided an update of its strategy, including a new set of financial targets for the coming three-year cycle (2020 to 2022).
Philipp Rickenbacher, CEO of Julius Baer, said: "With the successful growth strategy of the past decade, Julius Baer has defined pure wealth management. In the next decade, we aim to become the most reputable and admired wealth manager in the industry. To achieve this, we need to dynamically modernise our organisation. We will sharpen our value proposition for high net worth and ultra-high net-worth clients. We will accelerate our investments in human advice and technology. And we will shift our leadership focus from an asset-gathering strategy to one of sustainable profit growth."
The Swiss bank is well positioned in wealth management for the future.
Julius Baer will offer its two client segments, HNWI and UHNWI, a sharpened, distinct value proposition. Contrary to industry trends, HNWI will continue to be served in a personal way. They will be offered an unrivalled breadth of solutions that can be customised based on technology, supporting scalability. UHNWI and wealthy families will benefit from Julius Baer's global coverage, full access to its expertise and the ability to deliver highly bespoke solutions, based on the Group's open product architecture and its balance sheet, without the conflict of other lines of business.
The Group will invest even more in its range of solutions and expertise - already one of the most comprehensive ones in the industry - to enhance its relevance for clients and capture new market opportunities. Examples of innovation in these areas are digital assets, structured lending, and impact investing.
Investments in technology to power human advice will be accelerated and will be increased by approximately 20% in 2020 and 2021. This will create new revenue opportunities and improve efficiency. The main shift will be from the modernisation of the back-end to investment in enhancing client value at the front-end.
The bank will continue to attract the top entrepreneurial talent in the industry - relationship managers, but also specialists and technology experts. It will invest in developing junior relationship managers in-house, and will upgrade incentive and compensation systems, in line with its financial targets, entrepreneurial aspiration, and risk standards.
With Julius Baer's shift from an asset-gathering strategy to one focused on sustainable profit growth, the Group is introducing new targets for the coming three-year cycle (2020 - 2022):
- An adjusted pre-tax margin of 25 to 28 basis points
- An adjusted cost/income ratio of 67% or lower
- Over 10% annual growth in adjusted1 pre-tax profit over the cycle, assuming no meaningful deterioration in markets or foreign exchange rates
- Adjusted return on CET1 capital of at least 30% by 2022, supported by active capital management
To implement its strategy, Julius Baer will start a three-year programme to enhance its client value, improve its productivity and efficiency, and strengthen its risk culture and teamwork. The programme is expected to deliver more than CHF150m of revenue improvements to offset anticipated industry-wide margin pressure through an enhanced offering, the roll-out of additional fee-based advisory models, the deepening of its structuring and credit capabilities, as well as price realisation.
Julius Baer will reduce its cost base by CHF200m through productivity and efficiency measures. These measures will include simplifying its organisation, improving operational excellence in all areas, and reviewing the Group's geographic footprint based on future growth potential. It has already been decided that the booking centre in the Bahamas will close.
As part of its three-year programme, Julius Baer will also uncompromisingly strengthen its corporate values as well as its robust risk and compliance culture, based on professional integrity and teamwork.
The impact of the programme will start to materialise in 2021 and be fully realised by 2022.