Julius Baer edges higher as rate path offsets weak client activity
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By Geoffrey Smith
Investing.com — Julius Baer (SIX:BAER) stock ground higher in morning trading in Europe on Monday after reporting another set of figures that showed the Swiss asset manager’s client activity struggling to pick up against a backdrop of sustained volatility in global markets.
By 5:20 ET (10:20 GMT), Julius Baer stock was up 0.5%, outperforming other European asset managers slightly on a day overshadowed by reports of spreading Covid-19 cases in China that have cast doubt on its ability to relax its current health policy.
Julius Baer said that the «clear improvement in net money inflows» that it had seen in the first half of the year continued in the four months through activity, but suggested that its clients were reluctant to trade, in a period where the steep rise in inflation has made it hard to find a successful defensive strategy. It noted that the preference for deleveraging among parts of its client base, coupled with the declines in global stock and bond prices, had left assets under management 11% below their end-2021 levels at CHF 429 billion ($1=CHF0.9592). Even that number was padded by a CHF 19B tailwind from the currency markets.
Despite that, Baer said its gross margin improved to 91 basis points over the period, well above last year’s 82 basis points, thanks to capital discipline and other efficiencies.
«This development more than offset the gross margin impact from client activity which, while continuing to normalize from the lows seen in May–June 2022, did not reach the volumes reported for full-year 2021.» it said.
Baer has set itself targets of a cost-income ratio of 64% and an adjusted pretax margin of 28 basis points on the three-year cycle through 2022. It said the most recent developments leave these targets «well within reach — despite the year-to-date in clients assets.» In the four months through October, the cost-income ratio was 66% and the adjusted margin a little below 26 basis points.
