[ZURICH] Julius Baer Group unveiled fresh targets aimed at cutting costs and setting the Swiss wealth manager on the road to better profitability, though investors saw little reason to cheer.
Shares in the Zurich-based lender fell after the open on Tuesday (Jun 3), following chief executive officer Stefan Bollinger’s announcement of an extra 130 million Swiss francs (S$205 million) in cost cuts through 2028. The bank set a weaker efficiency target, and gave little detail on growth measures.
Bollinger and new chairman Noel Quinn are seeking to put the bank on a path for growth after a string of missteps including the 2023 losses linked to the Signa real estate collapse. Yet both of Bollinger’s strategy announcements since taking over in January have left investors looking for more.
Baer shares were down 1.5 per cent at 9.47 am in Zurich.
The firm scrapped medium-term targets for profitability, and instead introduced a goal for net new money, a key metric for wealth managers. The bank aims to improve the measure by 4 to 5 per cent over the next three years.
“Baer has reported an underwhelming strategy update as net new money and cost income ratio targets fail to excite relative to expectations,” analysts including Tom Hallett at KBW wrote in a note.
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On growth, the bank said it intends to “sharpen segmentation and coverage, enhance its product offering, strengthen top positions in core geographies, and increase productivity.”
Buybacks frozen
In May the bank booked another large loss from property developments it helped finance. The 130 million Swiss francs loan-loss charge related to its private debt business and selected positions in its mortgage operation.
In the same month Julius Baer disclosed that regulators had ordered it to hand over 4.4 million Swiss francs because of alleged failings in money-laundering controls related to transactions that had occurred between 2009 and 2019.
Baer confirmed that a share buyback programme is on hold until it has clarity over the outcome of an investigation into the Benko losses by the regulator Finma has concluded.
Anke Reingen, an analyst at RBC Capital Markets, said that the target updates “make sense” but that investors would need to see “evidence of a better outcome and buybacks to resume to see earnings growth and upgrades coming through.” BLOOMBERG
