Julius Baer shares fall in Zurich; record half-year results fail to impress
Results exceeded guidance, but certain aspects were not well received, as was the lack of information regarding the ongoing investigation by the supervisory authority FINMA
(Il Sole 24 Ore Radiocor) - Julius Baer’s half-year results received a cool reception on the Zurich Stock Exchange. Shares in the asset management firm fell by around four points, ending up among the worst performers on the Stoxx Europe 600 index, whilst the SMI index rose. In fact, the key first-half indicators are better than market expectations, but certain aspects failed to impress, as did the lack of information regarding the ongoing investigation by the financial regulator FINMA.
“Julius Baer has posted a record net profit, driven by assets under management at an all-time high, strong client activity and improved operating leverage,” the company announced. Adjusted net profit rose by 32 per cent to 673 million Swiss francs in the first half of the year. Pre-tax profit under IFRS jumped by 120 per cent to 814 million. At the end of June, Julius Baer managed assets of 547 billion Swiss francs, up 5 per cent, mainly due to new capital inflows of 5.7 billion Swiss francs, following the 7.9 billion recorded in the first half of 2025. The gross margin improved to 87 basis points from 83 bps year-on-year, thanks to “exceptional client activity in the first quarter”.
The Swiss bank also reported a further improvement in operating leverage, resulting in a reduction in the adjusted cost-to-income ratio to 62.6 per cent, compared with 68.2 per cent year-on-year in the first half of 2025. Traders also note that the results benefit from a favourable basis for comparison following the substantial write-downs that had weighed on the previous year’s results. Analysts at RBC Capital Markets note that adjusted net profit is 4.8% higher than analysts’ estimates and pre-tax profit beats expectations by 2.9%.
"Although the report provided some reassurance following the disappointing update on first-quarter performance, the forecast of continued difficulties for net new capital inflows in 2027, linked to risk reduction, raises some questions about the sustainability of these trends", warned RBC, referring to comments made by management during the earnings presentation that the ‘derisking’ process initiated by the bank takes time. Analysts at UBS highlighted “good cost control”, with the cost-to-income ratio falling to 62.6 per cent, better than market expectations (64.7 per cent). According to experts at Octavian Julius Baer, “it clearly met most expectations and was a pleasant surprise in terms of operating expenses”.
However, analysts are more critical of the new inflows of liquidity, which have shown annualised growth of 2.2 per cent. Given that management is forecasting growth of between 2.5% and 2.8% this year, this “increases the pressure” on the bank in the second half of the year to meet this target. In the second half of the year, Julius Baer will therefore need to achieve annualised growth in cash inflows of between 3% and 3.4% to meet this target, according to analysts’ calculations.
