Zurich, 3 February 2014
Presentation of the 2013 full-year results* for the Julius Baer Group
Assets under management up 34% to CHF 254 billion, including CHF 53 billion
from IWM - Adjusted net profit CHF 480 million
*Assets under management (AuM) grew to CHF 254 billion, an increase of CHF
65 billion, or 34%. This included CHF 53 billion from Merrill Lynch's
International Wealth Management (IWM) business, which Julius Baer is in
the process of acquiring. Net new money was CHF 7.6 billion. Total client
assets (including assets under custody) increased by 26% to CHF 348
*Operating income rose by 26% to CHF 2,195 million, and the gross margin
remained at 96 basis points (bps). Adjusted operating expenses went up by
29%** to CHF 1,611 million. The adjusted cost/income ratio improved** to
*Adjusted net profit, reflecting the underlying operating performance, went
up by 19%** to CHF 480 million and adjusted earnings per share (EPS) by
12%** to CHF 2.24.
*IFRS net profit declined by 30%** to CHF 188 million, as the improvement
in operating results was more than offset by the impact (as planned) of
the IWM-related integration and restructuring expenses, the ongoing
amortisation of acquisition-related intangible assets, and a provision in
relation to the withholding tax treaty between Switzerland and the UK.
*The Group's capital position remained solid, with a year-end BIS total
capital ratio of 22.4% and a BIS tier 1 capital ratio at 20.9%.
*The Board of Directors will propose to the AGM on 9 April 2014 an
unchanged ordinary dividend of CHF 0.60 per share, to be paid out of the
share premium reserve.
*The IWM integration developed successfully during 2013. Based on current
expectations, it is envisaged that by the end of the integration process
in early 2015 the Group will achieve the asset transfer target, towards
the lower end of the CHF 57bn to CHF 72bn range, which would thereby also
reduce the maximum total transaction price.
Boris F.J. Collardi, Chief Executive Officer of Julius Baer Group Ltd., said:
"After a period of intense preparations, the implementation of the IWM
integration process paid off in 2013, resulting in an impressive transfer of
clients, assets and highly-rated IWM professionals to Julius Baer. In 2014,
our focus will shift to improving the cost efficiency of the rapidly grown
business, while not losing sight of our ambition to continuously deliver
top-quality advice and services to our growing international base of
Total client assets amounted to CHF 348 billion, an increase of 26% since the
end of 2012. Assets under management grew by 34%, or CHF 65 billion, to CHF
254 billion. This included CHF 53 billion of AuM reported from IWM, of which
CHF 40 billion were booked on the Julius Baer platforms and paid for. Outside
the contribution from IWM, the increase in AuM was mainly the result of net
new money of CHF 7.6 billion or 4% and a positive market performance of CHF 7
billion, partly offset by a negative currency impact of CHF 3 billion. Net new
money was driven by continued net inflows from the growth markets and from the
local business in Germany, while the inflows in the cross-border European
business were more than offset by tax regularisations of legacy assets. Assets
under custody came to CHF 93 billion, up by 6% from the CHF 88 billion at the
end of 2012.
Operating income rose to CHF 2,195 million, an increase of 26%, in line with
the growth in monthly average AuM (to CHF 229 billion). The full-year gross
margin for the Group (including the IWM businesses acquired during the year)
therefore remained at 96 bps.
Net commission and fee income contributed CHF 1,277 million, up by 30%,
slightly above the increase in average AuM. Net interest and dividend income
declined by 1% to CHF 552 million. Net trading income increased by 82% to CHF
315 million. Other ordinary results doubled to CHF 51 million.
In 2013, adjusted operating expenses went up by 29% to CHF 1,611 million. The
increase in expenses was substantially attributable to the transfer of the IWM
businesses in 2013. The total number of employees grew by 1,669 full-time
equivalents (FTEs) to 5,390 FTEs, a rise of 45%, including a net 1,220 FTEs
from IWM. The number of relationship managers grew by 391 FTEs to 1,197 FTEs,
of which 365 FTEs from IWM. As a result, the adjusted personnel expenses went
up by 20% to CHF 984 million. Adjusted general expenses rose by 54% to CHF 536
million. This increase was significantly driven by a shift from a CHF 17
million net release to a CHF 46 million net charge for valuation allowances,
provisions and losses. Adjusted general expenses included CHF 35 million of
costs related to the US tax situation (2012: CHF 38 million), of which CHF 15
million was a provision for expected future legal fees.
As a result, the adjusted cost/income ratio*** improved to 71% (2012 restated:
73%). Excluding the expenses related to the US tax situation, the adjusted
cost/income ratio was 70% (2012 restated: 71%).
Adjusted profit before taxes went up by 19% to CHF 583 million. The related
income taxes increased to CHF 103 million, representing a tax rate of 17.7%.
Adjusted net profit - reflecting the underlying operating performance which
allows a meaningful comparison of underlying results over time - improved by
19% to CHF 480 million, and, following the higher share count after the
IWM-related capital increase, adjusted earnings per share by 12% to CHF 2.24.
As in previous years, in the analysis and discussion of the results in the
Media Release and the Business Review, adjusted operating expenses exclude
integration and restructuring expenses (CHF 199 million, almost entirely
related to IWM, up from CHF 57 million in 2012) as well as the amortisation of
intangible assets related to acquisitions (CHF 101 million, up from CHF 90
million in 2012). IFRS net profit declined by 30% to CHF 188 million, as the
improvement in operating results was more than offset by the impact (as
planned) of the IWM-related integration and restructuring expenses, the
ongoing amortisation of acquisition-related intangible assets, and a provision
of CHF 29 million in relation to the withholding tax treaty between
Switzerland and the UK. On the same basis, and following the higher share
count after the capital increases in October 2012 and January 2013, EPS
decreased by 34% to CHF 0.88, from the restated CHF 1.33 a year ago.
Balance sheet and capital developments
Total assets increased by 32%, to CHF 72.5 billion. Mainly as a result of the
business transferred from IWM, client deposits went up 32%, to CHF 51.6
billion, and the total loan book by 39%, to CHF 27.5 billion (comprising CHF
20.4 billion of collateralised Lombard loans and CHF 7.1 billion of
mortgages), resulting in a continued conservative loan-to-deposit ratio of
0.53. At the end of 2013, total equity increased by CHF 0.3 billion to CHF 5.0
billion. Total capital amounted to CHF 3.6 billion, of which tier 1 capital
CHF 3.3 billion. With risk-weighted assets at CHF 15.9 billion, this resulted
in a BIS total capital ratio of 22.4% and a BIS tier 1 capital ratio of 20.9%.
Over approximately the next 12 months, as the final IWM client assets are
transferred and paid for in stages and as most of the remaining projected
IWM-related transaction, integration and restructuring costs are expensed, the
Group's total and tier 1 capital ratios are expected to decrease closer to the
medium-term target levels.
Unchanged ordinary dividend proposed
The Board of Directors will propose to the AGM on 9 April 2014 an unchanged
ordinary dividend of CHF 0.60 per share. As was the case in 2011, 2012 and
2013, it is proposed that the dividend will be paid out of the share premium
reserve. The distribution would therefore not be subject to Swiss withholding
tax and, for Swiss individual investors who hold their shares as private
assets, not be subject to income taxes.
In the first half of 2013, CHF 24 billion of IWM AuM were transferred to
Julius Baer, of which CHF 12 billion booked on the Julius Baer platforms and
paid for. In the second half of 2013, over CHF 28 billion of IWM AuM were
additionally transferred to Julius Baer, taking total IWM AuM reported to CHF
53 billion by the end of 2013, of which CHF 40 billion were booked on the
Julius Baer platforms and paid for. Since the start of the IWM integration
process on 1 February 2013, a total of 15 IWM locations have now entered the
transfer process. The total number of IWM staff at Julius Baer has increased
to 1,220 FTEs, of which 365 FTEs are relationship managers. As a result of the
successful transfer rate in 2013 and based on the current expectations for the
remainder of the integration process, it is envisaged that by the end of the
integration process in early 2015 the Group will achieve the asset transfer
target, however towards the lower end of the CHF 57 billion to CHF 72 billion
range, which would thereby also reduce the maximum total transaction price.
Before the end of 2013, the Group started sequentially implementing the
required restructuring and rightsizing measures with an objective to achieve
the previously stated profitability improvement targets for 2014 and 2015. The
estimate for the total IWM-related transaction, restructuring and integration
costs to be borne by Julius Baer remains at approx. CHF 455 million, of which
CHF 244 million was booked in 2012 and 2013.
* The adjusted results as presented and commented in this Media Release and in
the Business Review are derived by excluding from the audited IFRS financial
statements the integration and restructuring expenses, the amortisation of
intangible assets related to acquisitions or divestments and charge in 2013 in
relation to the withholding tax treaty between Switzerland and the UK.
** Revised IFRS accounting standards related to the Group's pension plan that
became effective on 1 January 2013 and are described in the Group's
Consolidated Financial Statements 2013 resulted in a restatement of personnel
and tax expenses and certain balance sheet items for the 2012 reporting
period. The final restated figures differ from the preliminary 2012
restatement initially communicated on the occasion of the presentation of the
2013 half-year results on 22 July 2013. The 2012 adjusted operating expenses
were restated to CHF 1,247 million, the adjusted cost/income ratio to 73%,
adjusted net profit to CHF 404 million, adjusted earnings per share to CHF
2.00, and IFRS net profit to CHF 269 million.
*** Calculated using adjusted operating expenses, excluding valuation
allowances, provisions and losses.
Please refer to the Business Review page 4 for the full description of the
The results conference will be webcast at 9:30 a.m. (CET). All documents
(presentation, Business Review 2013, Consolidated Financial Statements 2013
and this media release) will be available as of 7:00 a.m. (CET) at
Media Relations, Zurich, tel. +41 (0) 58 888 8888
Investor Relations, tel. +41 (0) 58 888 5256
3 March 2014 : Publication of the Annual Report 2013
9 April 2014 : Annual General Meeting 2014, Zurich
11 April 2014 : Ex-dividend date
15 April 2014 : Record date
16 April 2014 : Dividend payment date
14 May 2014 : Publication of four-month Interim Management Statement
22 July 2014 : Publication and presentation of 2014 half-year results, Zurich
About Julius Baer
Julius Baer is the leading Swiss private banking group with a focus on
servicing and advising sophisticated private clients and a premium brand in
global wealth management. Julius Baer's total client assets amounted to CHF
348 billion at the end of 2013, including CHF 254 billion of assets under
management. Bank Julius Baer & Co. Ltd., the renowned Swiss private bank with
origins dating back to 1890, is the principal operating company of Julius Baer
Group Ltd., whose shares are listed on the SIX Swiss Exchange (ticker symbol:
BAER) and form part of the Swiss Market Index (SMI), comprising the 20 largest
and most liquid Swiss stocks.
Julius Baer is currently integrating Merrill Lynch's International Wealth
Management business outside the US. This will increase the Group's presence to
more than 25 countries and 50 locations. Headquartered in Zurich, we have
offices in key locations including Dubai, Frankfurt, Geneva, Hong Kong,
London, Lugano, Monaco, Montevideo, Moscow, Singapore and Tokyo.
For more information visit our website at www.juliusbaer.com
Disclaimer regarding forward-looking statements
This media release by Julius Baer Group Ltd. ('the Company') includes
forward-looking statements that reflect the Company's intentions, beliefs or
current expectations and projections about the Company's future results of
operations, financial condition, liquidity, performance, prospects,
strategies, opportunities and the industries in which it operates.
Forward-looking statements involve all matters that are not historical facts.
The Company has tried to identify those forward-looking statements by using
the words 'may', 'will', 'would', 'should', 'expect', 'intend', 'estimate',
'anticipate', 'project', 'believe', 'seek', 'plan', 'predict', 'continue' and
similar expressions. Such statements are made on the basis of assumptions and
expectations which, although the Company believes them to be reasonable at
this time, may prove to be erroneous.
These forward-looking statements are subject to risks, uncertainties and
assumptions and other factors that could cause the Company's actual results of
operations, financial condition, liquidity, performance, prospects or
opportunities, as well as those of the markets it serves or intends to serve,
to differ materially from those expressed in, or suggested by, these
forward-looking statements. Important factors that could cause those
differences include, but are not limited to: changing business or other market
conditions, legislative, fiscal and regulatory developments, general economic
conditions in Switzerland, the European Union and elsewhere, and the Company's
ability to respond to trends in the financial services industry. Additional
factors could cause actual results, performance or achievements to differ
materially. In view of these uncertainties, readers are cautioned not to place
undue reliance on these forward-looking statements. The Company and its
subsidiaries, its directors, officers, employees and advisors expressly
disclaim any obligation or undertaking to release any update of or revisions
to any forward-looking statements in this media release and any change in the
Company's expectations or any change in events, conditions or circumstances on
which these forward-looking statements are based, except as required by
applicable law or regulation.
Media Release Key Figures
Business Review (Preprint)
Consolidated Financial Statements (Preprint)
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