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Investing.com -- Julius Baer said on Monday it has booked an additional 149 million Swiss francs in loan-loss provisions, closing a credit review the bank says will help it resolve legacy issues and turn a corner.
The process led the group to unwind part of a loan portfolio that no longer fits with its strategy and revised risk appetite.
The bank said the review’s conclusion marks the last step in addressing past credit problems that triggered losses, write-downs and management changes. It also reaffirmed that the Lombard loan book and traditional residential mortgage portfolio are resilient.
“With our clear strategic focus, our revised risk appetite framework, and overall strengthened risk function and processes, we are now entirely aligned around our core wealth management proposition," said CEO Stefan Bollinger.
Bollinger added that the bank is “not quite there yet” on resuming share buybacks due to an ongoing FINMA enforcement procedure.
Julius Baer expects the full-year net profit for 2025 to fall below 2024 levels.
Shares edged lower by around 1% in early European trading.
The company reported assets under management (AUM) of a record 520 billion Swiss francs at the end of October, up from 483 billion francs at the end of June, lifted by 11.7 billion francs in net new money and rising markets, offsetting the impact of a stronger franc.
Higher client assets, combined with a largely unchanged gross margin, drove revenue growth during the period. The company posted an adjusted gross margin of "just over 82 basis points" for July through October. Cost/Income for the four months was 63%.
Morgan Stanley analyst Giulia Aurora Miotto pointed to “very strong” operating performance across AUM, gross margins and costs, though net new money (NNM remained soft due to client de-risking.
"We expect a small positive reaction given strong underlying trends, but comments in the analyst call at 7:15UK time will be key to understand whether further legacy issues persist and how quickly the bank can get past FINMA enforcement action," the analyst said.
Separately, Jefferies also highlighted "positive operating trends" for the July-October period.
The bank also said Victoria McLean, formerly of Goldman Sachs, will join as chief compliance officer at the end of February, pending regulatory approval.