Julius Bär Gruppe (BAER) H2 2023 earnings summary

Executive summary

• IFRS net profit attributable to shareholders fell 52% to CHF 454m; underlying net profit was CHF 947m, down 10%, and underlying PBT was CHF 1,120m, down 7%, excluding the private-debt loss.

• Net new money rose 43% to CHF 12.5bn; AuM increased 1% to CHF 427.4bn, with stronger CHF offsetting positive market performance.

• The private-debt book is being wound down; the largest exposure was fully covered by a CHF 586m allowance, and the remaining CHF 0.8bn book was reviewed as diversified and performing.

Financial highlights

• Operating income fell 16% to CHF 3,240m; excluding the large private-debt credit loss, it was CHF 3,825m, down CHF 28m.

• Net interest income rose 2% to CHF 842m; net commission and fee income fell 2% to CHF 1,930m, while FVTPL income rose 1% to CHF 1,058m.

• Adjusted operating expenses increased 2% to CHF 2,705m amid investment in growth, talent and technology; the underlying adjusted cost/income ratio was 69.1%, versus 65.9% in 2022.

• Adjusted net profit was CHF 472m, down 55%, and adjusted EPS was CHF 2.30, down 54%, excluding M&A expenses and associated taxes.

Outlook and guidance

• 2024 interest-driven gross margin is expected to remain stable versus H2 2023, supported by treasury investment roll-over effects and limited further shifts from current accounts to call and term deposits.

• Tax-rate guidance is 16–17% for 2024 and above 17% for 2025, reflecting a larger PBT contribution from higher-tax jurisdictions.

• 2023–2025 targets remain adjusted cost/income below 64% and pre-tax margin of 28–31bp by 2025; PBT average annual growth above 10% and RoCET1 above 30% over the cycle, assuming no major market deterioration.

• Gross savings target increased to CHF 130m; CHF 45m of run-rate savings was achieved by end-2023, with full impact targeted by end-2025. Restructuring costs are expected to total CHF 35m, including CHF 15m booked in 2023.