Swiss private-banking group Julius Baer Group Ltd. (JBAXY.PK, JBARF.PK) reported Monday a higher profit for its first half benefited by lower expenses and higher net interest income. Adjusted profit declined from last year amid margin pressure. Assets under management grew on strong net inflows, positive market performance and currency impacts.
In a separate statement, Julius Baer said it has entered into a strategic collaboration agreement with Bank of China Limited to mutually cross-refer clients as well as undertake various joint marketing activities. Under the deal terms, Bank of China will refer clients with international private banking needs outside Chinese Mainland to Julius Baer. At the same time, clients of Julius Baer requiring banking services will be referred to Bank of China.
The company noted that both partners would cooperate in product distribution and financial market research as well as certain joint initiatives including investment conferences. In addition, Bank of China (Suisse) SA will be integrated into Bank Julius Baer.
Regarding the company's results, Chief Executive Officer Boris Collardi said, "Julius Baer's growth strategy remained well on track in the first half of 2012 as evidenced by the strong net new money inflows. At the same time, the ongoing economic and political uncertainty, dominated by the eurozone crisis, continued to frame the market environment. Against this background, our clients maintained their overall cautious investment stance leading to relatively restrained transaction and trading activity."
"Despite the impact of these developments on revenues, we largely defended our profitability on account of continued cost containment and careful allocation of resources," he added.
For the first half, net profit attributable to shareholders, on IFRS basis, improved 19 percent to 175.5 million Swiss Francs. IFRS earnings per share climbed 25.6 percent to 0.90 francs.
The prior year's results were hurt by one-off tax-related Germany payment of 50 million euros or 65 million francs.
Adjusted net profit, which excluded certain items, but included Germany payment, increased 13 percent to 221 million francs and adjusted earnings per share grew 19 percent to 1.14 francs. Excluding the 2011 Germany payment, adjusted net profit decreased 11 percent and earnings per share fell 6 percent.
In the first half, net interest income rose 2 percent to 322.7 million francs, while net fee and commission income was hurt by the reduced level of client activity in transacting securities. Net trading income declined 39 percent mainly on lower client-related foreign exchange trading income following reduced volatility in the FX markets.
Gross margin of 98 basis points dropped by 7 basis points from last year - a direct reflection of reduced levels of client activity in foreign exchange trading and securities transactions, the company noted.
Assets under management grew 5 percent since the end of 2011 to 179 billion francs.
Net new money inflows increased on strong contributions from the growth markets and from the local private banking business in Germany.
Julius Baer said it has no treasury exposure to Greek, Portuguese, Spanish or Irish issuers and only marginal exposure to Italian sovereign credit.
As at the end of June, the bank's BIS total capital ratio stood at 23.6 percent and the BIS tier 1 ratio at 21.4 percent, essentially unchanged from the end of 2011.
In Zurich, Julius Baer shares closed Friday's trading at 34.69 francs, down 0.31 francs or 0.89 percent.
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