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August 1, 2018

GAM results show pre-tax profit for H1 soaring by 21%

Swiss money manager GAM Holding has reported underlying pre-tax profit of CHF91.3m for the first half of 2018. The GAM  pre-tax profit is an increase of 21% compared to CHF75.4m a year ago.

GAM results

The group’s underlying net profit was CHF71.7m, a 22% surge from CHF58.7m last year.

The IFRS net profit however slumped 62% to CHF25.4m from CHF67.7m a year earlier, due to an impairment charge related to the takeover of Cantab Capital Partners. Net fee and commission income rose 12% year-on-year to CHF287.7m.

The group’s assets under management totalled CHF163.8bn as at 30 June 2018.

Assets under management in the group’s investment management unit totalled CHF84.4bn at the end of June 2018, an increase of 17% compared to CHF72.2bn in the previous year. The unit recorded net inflows of CHF2.6bn, driven by specialist fixed income strategies.

Assets under management in the group’s private labelling division were CHF79.4bn as at 30 June 2018, a 34% surge from CHF59.1bn last year. The unit reported net inflows of CHF6.7bn during the period.

GAM group CEO Alexander Friedman said: “We have made tangible progress on all our strategic initiatives, as is evident in our underlying results. We are bringing new innovative and differentiated products to the market; our distribution strategy is delivering good results; and we continue to see growth potential in all our capabilities.

“However, market conditions have become more challenging, and some clients are choosing to rebalance their portfolios as we enter the later stages of this long-running bull market. As a result, we saw a significant slowdown in net inflows in the later part of the first half of 2018. The volatile and directionless market conditions are likely to continue in the second half of this year, which may affect clients’ risk appetite and our flows.”

Meanwhile, GAM suspended head of its CHF11bn absolute return bond strategy (ARBF) Tim Haywood following an internal probe that revealed breaches in his risk management and record keeping processes.

“The investigation has not raised concerns regarding his honesty,” GAM said in a statement.

The probe has till now not unveiled any material impact on clients. However, the firm is still reviewing potential losses.

ARBF will now be jointly managed by investment directors Jack Flaherty and Alex McKnight.

“We take our responsibilities and controls very seriously. Having conducted the investigation with external counsel, we now intend to follow our usual internal processes and will take any further action that may be appropriate,” Friedman noted.

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