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July 20, 2020

Julius Baer net profit soars in H1 2020 on trading boost

Swiss private bank Julius Baer has reported a 43% surge in net profit in H1 2020 driven by trading activity by wealthy clients.

The bank’s net profit in H1 2020 was CHF491m ($522m), compared to CHF342.9m in the prior year.

Strong contributions from European and Asian clients resulted in CHF5bn of net inflows.

In Europe, the main contributors were Germany, UK, Ireland, and Luxembourg. In Asia, inflows were mainly driven by Hong Kong and Japan.

However, negative market performance coupled with the strengthening of the Swiss franc led to a decrease in assets under management (AuM).

AuM as of 30 June 2020 stood at CHF402m, down 6% from CHF426.1bn at December-end 2019.

Julius Baer’s operating income was CHF1.85bn in the first six months of 2020, up 9% from CHF1.7bn a year ago.

Net income from financial instruments measured at FVTPL jumped 71% to CHF515m, with more client activity in FX, derivatives and precious metals trading and higher income from structured products.

Net commission and fee income increased 8% to CHF1.03bn over the prior, due to higher brokerage commissions and income from securities underwriting.

Lower contribution from Kairos led to a fall in advisory and management fees.

Net interest income slumped 19% to CHF333m after a sharp drop in US interest rates.

The group’s BIS CET1 capital ratio and BIS total capital ratio were 13.9% and 20%, respectively, at the end of June 2020. The ratios are said to be “well above” minimum regulatory requirements.

Julius Baer Group CEO Philipp Rickenbacher said: “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.”

At the end of last year, Julius Baer’s net profit plunged 37% to CHF465m on a year-on-year basis.

The bank also shifted “from an asset-gathering strategy to one focused on sustainable profit growth” and announced 300 job cuts.

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