GAM Swings to Profit After Boosting Fees and Client AssetsGiles Broom
GAM Holding AG, the Swiss money manager that split from Julius Baer Group Ltd., swung to a full-year profit after increasing revenue from fees and amassing net new money from customers.
Net income was 86.7 million Swiss francs ($92 million), compared with a loss of 95 million francs a year earlier after the Zurich-based company more than trebled fee income linked to the success of funds, the firm said today in its annual report.
“The performance fees indicate that investment performance is robust, which should help drive inflows throughout 2013,” said Peter Lenardos, a London-based analyst with RBC Capital Markets, who rates the stock as outperform. “For a conservative Swiss company the outlook statement is very encouraging.”
GAM Holding rose 4.5 percent and was up 4.2 percent at 16.30 francs at 9:31 a.m. in Zurich, valuing the company at 3 billion francs. The stock has surged 32 percent this year, for the second-biggest gain in the Stoxx 600 Financial Services Index behind London-based 3i Group Plc. The 30-member gauge has climbed 11 percent.
The firm, which is buying back as much as a fifth of its shares by May 2014, said assets under management were little changed at 116.2 billion francs in the final quarter. Managed assets increased 9 percent in the 12 months though Dec. 31, with customers adding 2.4 billion francs.
“In 2012 we saw a return to solid asset growth,” Chairman and Chief Executive Officer Johannes A. de Gier said in a press release. “As we are starting the year from a very strong position, with high levels of assets under management and strong investment performance, we have good reasons to be optimistic.”
The unit known as GAM reported net inflows in its single-manager funds, while clients pulled money from certain fund of hedge fund strategies, the firm said. The Swiss & Global Asset Management business selling Julius Baer-branded funds attracted more than 6 billion francs of inflows, with customers favoring fixed-income strategies and physical precious-metal exchange-traded funds.
While performance fees across both units surged to 82.1 million francs from 19.6 million francs a year earlier, the firm increased personnel expenses as it incorporated employees of Lugano, Switzerland-based Arkos Capital SA and paid bonuses to investment managers. The cost-to-income ratio, a measure of profitability, worsened to 67.1 percent from 64.2 percent.
GAM Holding reduced the carrying value of its financial investment in Artio Global Investors Inc. by 55.6 million francs, reflecting a decline in the New York-based asset manager’s share price. The firm reiterated it will sell the stake to Aberdeen Asset Management Plc, and it expects the transaction to close by the third quarter, resulting in a gain of about $13.5 million for GAM Holding.
Underlying profit, which doesn’t include investment impairments, dropped 2 percent to 162 million francs.