GAM Holding Boosts First-Half Profit as Fee Income GainsGiles Broom
GAM Holding AG, the asset manager that split from Julius Baer Group Ltd. almost four years ago, said first-half profit more than tripled after fee and commission income increased.
Net income rose to 117.5 million Swiss francs ($127 million) from 36.6 million francs a year ago, Zurich-based GAM Holding said today in a statement on its website. Net management fees and commissions climbed 14 percent to 278.9 million francs. The shares rose the most in almost 18 months.
“GAM Holding clearly came out with much better first-half results than expected, not purely due to increased performance fees but also due to increased management fees,” Teresa Nielsen, a Zurich-based analyst at Vontobel Holding AG with a hold recommendation on the stock, said in a note. “We expect net new money to improve and turn positive going forward.”
GAM Holding surged as much as 8.4 percent, the biggest intraday gain since January 2012, and was up 7.8 percent at 16.60 francs as of 10:31 a.m. in Zurich, valuing the company at 2.9 billion francs. The shares have gained 34 percent this year.
Net income was boosted after the sale of GAM Holding’s minority stake in Artio Global Investors Inc. to Aberdeen Asset Management Plc in May resulted in a one-time gain of 13.1 million francs.
“Investors are reassessing their portfolio allocations, preferring alternative fixed-income strategies” and “slowly but steadily regaining their appetite for equity investments,” Chief Executive Officer David Solo said in a statement.
Assets under management rose to 116.6 billion francs from 116.2 billion francs at year-end, with a “sharp market correction” in June, the firm said. GAM Holding reported net outflows of 600 million francs in the first half, including “substantial” client withdrawals from a physical gold fund after the price of the precious metal declined.
Customers showed “robust” interest in GAM’s China, continental European, North American and technology equity strategies and in Julius Baer-branded funds invested in Japan and luxury brands, the company said.
GAM Holding said it has repurchased about 71 percent of the maximum 41.3 million shares it expects to buy back by April 2014 as part of a three-year initiative and it’s committed to returning excess capital to shareholders through dividends.