Julius Bär Gruppe (BAER) H1 2024 earnings summary

Executive summary

• Assets under management rose 11% to CHF 474 billion in H1 2024, driven by strong equity markets, positive currency effects, and net new money inflows.

• Adjusted net profit was CHF 460 million, down 15% year-over-year but up 13% sequentially from H2 2023, as higher revenues from client activity and recurring fees were offset by a sharp drop in net interest income and continued investments in growth.

• Net new money inflows totaled CHF 3.7 billion, reversing a negative January and supported by strong client activity in key strategic markets.

• The Group maintained a robust capital position with a CET1 ratio of 16.3% and liquidity coverage ratio of 325%, among the highest in European banking.

• Achieved CHF 120 million run-rate cost savings in H1 2024, ahead of plan, with a target raised to CHF 145 million by 2025.

Financial highlights

• Operating income decreased 4% year-over-year to CHF 1,945 million, but increased 8% sequentially; gross margin dropped to 85 bps from 93 bps.

• Net interest income fell 52% year-over-year to CHF 223 million due to higher deposit costs.

• Net commission and fee income rose 14% year-over-year to nearly CHF 1.1 billion, supported by higher average AuM and increased client activity.

• Adjusted cost/income ratio increased to 71% from 65% in H1 2023, but improved from 73% in H2 2023.

• Pretax profit declined 15% year-over-year to CHF 551 million; adjusted EPS was CHF 2.24, down 15% year-over-year.

Outlook and guidance

• Interest-driven gross margin expected to remain stable around 24 basis points in H2 2024, supported by current balance sheet structure and treasury investments.

• Cost-to-income ratio target of below 64% by end-2025 remains, though achieving it will require both internal efforts and market tailwinds.

• Net new money growth expected to exceed 4% in 2025 as more RMs reach business case status.

• Tax rate guidance is 16%-17% for 2024, potentially higher from 2025.

• Continued focus on revenue growth, cost discipline, and business streamlining amid ongoing geopolitical and macroeconomic uncertainties.