Julius Baer recorded an adjusted net profit, excluding M&A, of CHF472m ($547m) in 2023, a 55% drop year-on-year.
This was attributed to credit losses of CHF606m due to loans to a European conglomerate, previously announced in November 2023. This includes a loan loss allowance of CHF586m for private debt exposure.
Excluding that, Julius Baer saw underlying profit before taxes of CHF1,120m (-7% year-on-year) in 2023 and underlying net profit of CHF947 million, a drop of 10% since 2022.
In addition, CEO Philipp Rickenbacher will step down in mutual agreement with the board and Nic Dreckmann, current deputy CEO and chief operating officer, will become interim CEO.
Romeo Lacher, chairman of Julius Baer Group, said: “Speaking on behalf of the entire Board of Directors, I deeply regret that the full loss allowance for the largest exposure in our private debt business has significantly impacted our net profit for 2023. Our 2023 results reflect our determination to end any uncertainty regarding our private debt business through this full loss allowance. The results also reflect the continued financial strength of Julius Baer, as expressed by our capitalisation, the solidity of our balance sheet, and our robust underlying profitability. We are refocusing our lending activity on more traditional areas, which are an important part of our wealth management offering.”
He added: “On behalf of the Board of Directors, I would like to thank Philipp Rickenbacher for his leadership as CEO over the past five years. He has navigated Julius Baer through a challenging time, charting a successful course that is tangible in the many transformational steps that have brought us to where we are today. During his tenure, we have produced the two best financial results in our history and have meaningfully strengthened our leading market position in wealth management across the globe.”
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Julius Baer and wealth in 2023
Julius Baer assets under management in 2023 grew by CHF3bn to CHF427bn, a 1% rise year-on-year.
The board of directors of Julius Baer also decided that the group will exit the private debt business. Instead, the bank will refocus all lending activities on mortgage and Lombard lending solutions where it has a successful long-term track record.
However, the firm said it was dedicated to wealth management despite the sale of Kairos in late 2023.