Trading spike helps Julius Baer beat forecasts in January to April

Published 19/05/2020 in Business News, Economy & Finance

Trading spike helps Julius Baer beat forecasts in January to April

ZURICH (Reuters) – A spike in trading volumes boosted margins for wealth manager Julius Baer (BAER.S) in the first four months of the year, even though markets slid and a strong Swiss franc ate into assets under management.

Baer attributed a 16% rise in gross margins in January to April to an “exceptional increase” in trading volumes.

Chief Executive Philipp Rickenbacher said in a statement it was “too early to assess with any certainty the impact of the COVID-19 crisis on the global economy, the financial markets, and the results of Julius Baer for the remainder of 2020.”

The trading update from Switzerland’s third-largest lender provided the first insight into the impact of the coronavirus crisis on wealth managers in April, after big banks UBS (UBSG.S) and Credit Suisse (CSGN.S) posted bumper profits for the first quarter.

Baer’s shares rose 6.8% in early trading on a strong margin beat and the best cost-income ratio in a decade.

“Baer has followed through on the strong first-quarter wealth management performances at Credit Suisse and UBS, and then some,” Jefferies analysts said in a note.

Baer, which said it would cut 300 this year, pointed to a particularly strong March but said margins were higher during each of the first four months.

The Zurich-based lender said on Tuesday said its three-year strategic programme to pare back costs and boost revenues was on track.

Assets under management fell 8% in the first four months of 2020 to 392 billion Swiss francs ($403 billion), as sliding markets and a stronger Swiss franc failed to offset a 2% rise in net new money growth.

Wealth management inflows, particularly from clients in Europe, helped make up for outflows from clients deleveraging.

The bank cited a slightly negative margin impact from lower net interest income and a moderate rise in expected credit losses, without providing figures.

($1 = 0.9718 Swiss francs)

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