Struggling private bank Julius Baer had to accept a decline in profits in the first half of 2024. Meanwhile, further measures have been taken to improve the situation.
As expected, the traditional Zurich bank Julius Bär suffered a profit decline in the first half of 2024 due to the loan debacle and reputational damage related to the Signa Group of Austrian investor René Benko.
Profit dropped by 15 percent compared to the same period last year, down to 452 million Swiss francs ($513 million), as the institution announced on Thursday. Operating income fell by 4 percent year-on-year, with higher recurring revenues and increased customer activity levels being more than offset by rising interest expenses. Consequently, the gross margin decreased from 93 basis points in the first half of 2023 to 85 basis points.
Measures to Increase Efficiency
Assets under management (AUM) rose by 11 percent during the reporting period to 474 billion francs, driven by rising stock markets, a weaker franc, and net new money of 3.7 billion francs. In the same period last year, net new money amounted to 7.1 billion francs.
«Our results for the first half of 2024 show that we have remained close to our clients to support them in positioning for the new investment cycle. We have also succeeded in hiring more top-tier client advisors, investing in future growth while continuing our measures to increase efficiency. In the meantime, we have strengthened the governance and risk management framework,» said Nic Dreckmann, interim CEO of the Julius Baer.
As Julius Bär announced on Tuesday, former Goldman Sachs banker Stefan Bollinger will take over the CEO position in February 2025.
Orderly Wind Down by End of 2026
In connection with the Signa loans, Julius Bär announced on Thursday that the nominal value of the loan book amounted to 0.6 billion francs at the end of June 2024, compared to 0.8 billion francs at the end of 2023 (after impairments). The bank currently expects the wind-down to be largely completed by the end of 2026.
