Julius Baer said its assets and profit margins were hit by weak stock markets in the third quarter and poor client trading activity. The private bank flagged cost cuts.
The Zurich-based private bank's assets under management rose to 395 billion Swiss francs (396.2 billion), which represents 2 percent growth so far this year, it said in a ten-month statement on Tuesday.
Though Julius Baer won net new money and added funds from the acquisition of Reliance Group in Brazil, the progress was wiped out by a torrid stock market correction in October, it said.
Net new money remain close to 5 percent – well within the 4 to 6 percent range set out by the bank – powered in particular by clients in Asia, the U.K., and Germany.
More Spending Cuts
The ten-month asset reading comes as Julius Baer is roiled by a major Latin American scandal which has seen one of its former private bankers sentenced to U.S. jail time. CEO Bernhard Hodler is overseeing a scouring of all accounts as well as reforming the Latin American arm.
Julius Baer's cost-income ration edged to 69 percent, above its the upper end of its 64 to 68 percent band. The bank cautioned that it may not make the target this year, depending on how it fares in November and December.
The bank said it has started cuts in discretionary spending – which may prove a tough feat heading into bonus season. «Julius Baer is taking additional steps to improve its efficiency, with the aim to reach the target in 2019.»
Opening vs Shutting
The bank has splashed out recently on more spacious offices in Hong Kong for its growing presence in Asia, on a cadre of private bankers in the U.K. and new offices in Manchester, Leeds, Edinburgh as well as in Germany, and the acquisition of Reliance earlier this year.
Julius Baer also clinched a partnership for Japan with Nomura, as well as opened up shop in South Africa. By contrast, the bank is shutting offices in Peru and in Panama, where Matthias Krull, the ex-private banker who was sentenced to jail in the U.S., was based. The bank said it would also stop taking clients from some, undisclosed countries.
