Market turbulence helps boost profits at Julius Baer

Julius Baer reported a jump in interim profits on Monday, after the Swiss bank benefited from heightened volatility across markets.

Net profits at the private bank, which specialises in high net worth individuals, rose 43% to CHF491m, while earnings per share were ahead 45% at CHF2.28.

Operating income grew 9% to CHF1.85bn, as a spike in client-activity - driven income outweighed lower net interest income - off 19% at CHF333m, on the back of sharply lower US interest rates - and higher net credit losses on financial assets.

The gross margin improved to 92 basis points compared to 83 bps a year earlier, above expectations, boosted in part by a 7% hike in brokerage fees and trading income rising by 11bps.

Assets under management dipped 6% since the end of 2019, however, to CHF402bn, "impacted by negative market performance and further strengthening of the Swiss franc", the bank noted.

Philipp Rickenbacher, who took over as chief executive last year, said the "outstanding" results demonstrated "the strength and resilience of our pure wealth management model".

"With the full economic impact of Covid-19 still ahead of us, we are confident that we are well prepared for a challenging second half of the year. We are well positioned to maintain the stability of our business, and reap opportunities when they arise," he said.

Morgan Stanley, which has an ‘overweight’ rating on the stock, called the results "mixed, with better-than-expected gross margin and inflows, but weaker-than-expected revenue composition.

"Overall, we expect that the trading/brokerage beat will likely be faded in 2021/22 consensus forecasts, while the weaker net interest income will likely weight on EPS."

At 1415 BST, shares in Julius Baer were trading 3% lower.

Larger Swiss bank UBS will post its second-quarter numbers on Tuesday, while Credit Suisse is due to publish results at the end of July.