Julius Baer Says Franc Strength Partly Offsets Inflows

Julius Baer Announces Share Buyback After Full-Year Net Drop
“We’ve seen regained momentum in the second half and hope to continue this into 2011,” Chief Executive Officer Boris Collardi, seen here in Sept., told reporters on a conference call today. Photographer: Jerome Favre/Bloomberg

May 12 (Bloomberg) -- Julius Baer Group Ltd., the 121-year old Swiss wealth manager, said client inflows in the first four months of the year were partly offset by Swiss franc gains.

Assets under management rose 1.8 percent to 173 billion francs ($195 billion) from the end of 2010, the Zurich-based bank said today in a statement. Baer aims to boost assets to 200 billion francs over the next two years.

Switzerland’s fifth-biggest money manager is seeking acquisitions to compete with larger rivals and building branch networks in Europe and Asia as clients reassess the benefits of cross-border accounts. Inflows were countered by the Swiss currency’s 8.1 percent gain against the dollar in the period.

“Though we have seen some recovery in client risk appetite, the process is slower than anticipated and foreign exchange continues to weigh,” Christian Stark, an analyst at Credit Agricole Cheuvreux, said in a note to clients. “Overall, a slight disappointment.”

Baer dropped 2.2 percent to 38.63 francs in Zurich trading, bringing this year’s decline to 11.8 percent. That compared with the 1.5 percent gain in the 48-member Bloomberg Europe Banks and Financial Services Index.

Baer’s growth markets last year included Latin America, Russia, the Middle East and Asia, which the bank has said it wants to make its “second home.” Baer in January hired 14 new bankers in Germany and opened new offices in Kiel and Wuerzburg.

“The continued solid contribution from growth markets again outstripped a lower growth in Western Europe,” Baer said in the statement. “The onshore German business again achieved strong net new money inflows.”

Beating Target

Net inflows on an annualized basis were “well into” the bank’s target range of 4 percent to 6 percent of assets, Baer said. The bank didn’t provide figures for the period.

The negative currency effect last year was 14.3 billion francs compared with net inflows of 8.8 billion francs.

The bank said its gross margin in the first four months of the year was “just above” the 105 basis points achieved in 2010. A basis point is one hundredth of a percent.

Baer will on May 23 begin buying back as much as 500 million francs of its own stock in a program that continues until April 11 next year.

To contact the reporters on this story:

Giles Broom in Zurich at gbroom@bloomberg.net; Leigh Baldwin in Zurich at lbaldwin3@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net