Profit falls by more than half at Julius Bär

The banking group is warning against "euphoria" in 2004 Keystone Archive

The Julius Bär banking group has reported that its net profit plunged by 55 per cent in 2003 to SFr82 million ($63.89 million) from SFr183 million the previous year.

The Zurich-based group said it had been hurt by one-time costs and the sale of its brokerage unit.

The news pushed the registered share price down at the stock exchange. At the end of trading on Wednesday, it had fallen by 8 per cent to SFr416.50 from Tuesday’s close of SFr452.50.

“The 2003 financial year was, for us, a year marked by deliberate consolidation,” commented chairman Raymond Bär in a statement.

“With the strategic decision to focus on our strength – asset management – we have laid the foundation for healthy and sustainable growth,” he added.

Assets under management rose by 12 per cent during the year to SFr116 billion, boosted by net new money inflows of SFr5.3 billion.

The bank reported that the weakness of the dollar had suppressed the growth of assets under management to the tune of SFr2.6 billion.

Net operating income fell by nine per cent to SFr1 billion, with SFr431 million or a stable 42 per cent attributable to private banking, SFr265 million (26 per cent) to asset management and SFr138 million (14 per cent) to trading and sales.

Cautious optimism

The group’s chief executive, Walter Knabenhans, said that for 2004 the bank was cautiously optimistic. At a news conference in Zurich, he forecast net profit for this year of SFr230 million.

“There is reason for confidence but no cause for euphoria,” he said.

“The trend in the second half of the year for assets under management, as well as for new money inflows, can be deemed positive as a whole.”

“Our efforts to improve profitability and contain costs will reinforce the positive effects of this growth,” he added.

In his outlook, Knabenhans said that an important strategic success factor was the group’s traditional family-dominated character as a private bank, combined with transparency as a stock listed on the Swiss Market Index.

“This clear differentiation and the deep-rooted brand internationally provide us with market advantages that we aim to exploit more thoroughly in an environment marked by change and consolidation,” he added.

swissinfo with agencies

In brief

Extraordinary costs and the disposal of brokerage activities have pushed profit down at Julius Bär by 55 per cent to SFr82 million.

But chief executive Walter Knabenhans has expressed cautious optimism for this year.

The board of directors is recommending a dividend of SFr6 per bearer share and SFr1.20 per registered share.

Julius Bär also announced a new share buyback programme of SFr65 million, starting this month and ending in February 2005.

The group had a staff of 1,766 at the end of 2003, some 22.3 per cent lower than at the end of the previous year (2,274).