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Investing.com -- Shares of Julius Baer (SIX:BAER)fell more than 4% on Wednesday after the Swiss wealth manager reported a CHF130 million net charge related to an ongoing review of its loan book, which includes mortgages and private debt.
The charge was accompanied by a series of changes to the firm’s risk function, including the appointment of a new chief risk officer.
The review remains in progress. The bank did not provide further details on the specific nature of the exposures under assessment.
Assets under management stood at CHF467 billion as of April 30, down from CHF497 billion at the end of fiscal 2024.
The 6% decline was mainly attributed to a CHF28 billion negative currency impact and the CHF8 billion deconsolidation of Julius Baer’s Brazil business. Net new money was CHF4.2 billion, or 2.5% annualized, slightly below the 3% consensus.
Inflows were driven by clients in Asia, particularly Hong Kong and Singapore, and in Western Europe, including the U.K. and Germany.
The underlying gross margin improved to approximately 89 basis points, above the expected 84 basis points, supported by increased client activity.
The activity-driven component rose to 28 basis points from 20 basis points in the second half of 2024.
The interest-driven margin declined to 21 basis points from 23 basis points, while the recurring income margin remained steady at 37 basis points.
The underlying pre-tax margin rose to 29 basis points, beating Jefferies’ estimate of 24 basis points. The underlying cost-to-income ratio was 66%.
After incorporating the CHF130 million charge, the reported gross margin was 79 basis points. The adjusted cost-to-income ratio increased to 72%, and the reported pre-tax margin fell to 21 basis points.
Julius Baer’s Common Equity Tier 1 capital ratio rose to 15.2%, compared with 14.2% at the end of fiscal 2024. The improvement included a 35-basis-point gain linked to the deconsolidation of the Brazil business.
Chief Risk Officer Oliver Bartholet will retire on July 1. He will be replaced by Ivan Ivanic, who joined the firm in February 2025 and previously served as chief risk officer for UBS in Asia.
Julius Baer also announced the creation of a new compliance function, which will report directly to the chief executive officer.
The bank said it expects IFRS net profit for the first half of 2025 to be lower than in the same period last year. It cited the loan loss provision, the Brazil deconsolidation and a normalization of the tax rate as contributing factors.