Julius Baer Gruppe AG · SIX:BAER
Julius Baer Gruppe — Julius Baer Group — FY2017 Earnings Presentation
35 slides from Julius Baer Gruppe's earnings presentation, Jan 31, 2018
Slide 1: FY 2017 Results and Business Update
FY 2017 RESULTS AND BUSINESS UPDATE Presentation for Investors, Analysts & Media Zurich, 31 January 2018
Slide 2: Content: Introduction
CONTENT Introduction Bernhard Hodler, CEO 2
Slide 3: A Strong Position to Drive a Sharpened Strategy
A STRONG POSITION TO DRIVE A SHARPENED STRATEGY Record profit | Acceleration in net inflows | Strong capitalisation | Increased dividend • Adjusted1 net profit for the Group: up 14% to record CHF 806 million Record profit • Gross margin resilient at 90 bp • Cost/income ratio2 at 69% – advancing towa
Slide 4: Content: Financial Results FY 2017
CONTENT Financial Results FY 2017* Dieter A. Enkelmann, CFO *Financial Results are presented on adjusted basis. See “Scope of Presentation of Financials” in the Appendix 4
Slide 5: 2017: Supportive Market Environment
2017: SUPPORTIVE MARKET ENVIRONMENT Partly offset by lower FX volatility 350 2017 development of FTSE ALL-WORLD INDEX1 340 330 320 • Stock markets benefited from continued 2017: +22% 310 positive economic momentum … 300 290 • … leading to higher valuations and 280 increased client engagement 270 Jan
Slide 6: AuM Increase of CHF 52bn (+16%) to CHF 388bn
AUM INCREASE OF CHF 52bn (+16%) TO CHF 388bn Driven by organic growth and market performance Development of Assets under Management (AuM) CHF bn • AuM CHF 388bn, +16% – Net new money CHF +22.2bn +34.2 +1.7 -6.1 388.4 – Net acquisitions2 CHF +0.3bn +0.3 Other - Market performance CHF +34.2bn +22.2 12
Slide 7: Net New Money Exceeding Target Range
NET NEW MONEY EXCEEDING TARGET RANGE Strong contributions from RMs hired in 2016 and 2017 Net New Money in CHF bn and %1 4.5% 3.9% 3.7% 4.1% 6.1% 6.7% • NNM: CHF 22.2bn (6.6%) 11.9 10.2 • Particularly strong inflows from Asia and Middle East … 6.5 6.4 • … and substantial recovery in Latin America 5.
Slide 8: Operating Income +14% to CHF 3.3bn
OPERATING INCOME +14% TO CHF 3.3bn Excluding CHF 39m Kairos fair value adjustment in 2016: +16% Operating Income Net commission/fee income +23% to CHF 1,931m CHF m vs. 2016 • Broadly similar percentage increases in asset-based fees and transaction-driven commissions 3,252 +14% • Increased asset-base
Slide 9: Gross Margin
GROSS MARGIN1 Decline y-o-y in trading gross margin2 was offset by increase in commission & fee gross margin 2015 2016 2017 99 94bp 3 91bp3 90bp 95 92 88 88 88 • 2016 Kairos fair value adjustment 1 (CHF 39m): equivalent to 1.2 bp 43 2 1 1 24 1 1 1 1 20 16 12 20 16 17 14 14 • Excluding this item, the
Slide 10: Operating Expenses +13% to CHF 2.3bn
OPERATING EXPENSES1 +13% TO CHF 2.3bn Excluding CHF 63m pension fund amendment in 2016: +9% Operating Expenses1 Personnel expenses +18% to CHF 1,549m CHF m • Excluding 2016 CHF 63m pension fund amendment: +12% from CHF 1,381m to CHF 1,549m 2,385 • 6% increase in average FTE vs. 2016 521 2,264 +13% G
Slide 11: Strong Growth in Operating Result
STRONG GROWTH IN OPERATING RESULT Group adjusted net profit CHF 806m CHF m 2016 2017 Change 2017/2016 Operating income 2,852 3,252 +14% Adjusted operating expenses 2,005 2,264 +13% Adjusted profit before taxes 848 989 +17% Adjusted pre-tax margin (bp) 27.1 27.3 +0.2 bp Income taxes 142 183 +29% 1 Ad
Slide 12: Solid Balance Sheet – Total Assets Stable
SOLID BALANCE SHEET – TOTAL ASSETS STABLE Low risk profile in CHF bn Liabilities Assets CHF 97.9bn & Equity (CHF 96.2bn)* Due from banks 8.3 (11.4) 7.2 (10.1) Due to banks Loan-to- deposit ratio 69% (57%) Loans (incl. Lombard lending and 46.6 (38.4) mortgages to private clients) 67.6 (67.5) Due to c
Slide 13: Significantly Strengthened Capital Ratios
SIGNIFICANTLY STRENGTHENED CAPITAL RATIOS Minimum regulatory requirement for tier 1 leverage ratio confirmed at 3% BIS CET1 capital ratio (fully applied) 13.5% (Phase-in1: 16.7%) 11.9% 10.6% +2.5% • Capital ratios well above minimum regulatory +0.9% Group’s own floor 11.0% +3.0% +3.0% +3.0% requirem
Slide 14: Further Rise in Dividend
FURTHER RISE IN DIVIDEND Pay-out ratio1 increased to 40% Dividend per share (CHF) for financial years 2012-2017 Proposed dividend CHF 1.40, up 17% 1.40 1.40 1.20 1.20 • Fourth consecutive dividend increase 1.00 1.10 1.00 0.80 • To be paid out of statutory capital reserve 0.60 0.60 0.60 0.40 • Total
Slide 15: Content: Business Update
CONTENT Business Update Bernhard Hodler, CEO 15
Slide 16: Leading Pure-Play Private Bank
LEADING PURE-PLAY PRIVATE BANK Sharpened strategy – three priorities TRUSTED ADVISORS Julius Baer as an unbiased partner with open architecture FOCUSED MARKET COVERAGE Enhancing the Group’s market focus and effectiveness GROWTH STRATEGY Organic growth complemented by targeted M&A 16
Slide 17: Trusted Advisors
TRUSTED ADVISORS “What matters to you?” Our promise to deliver the best possible financial solutions for our clients’ needs. WEALTH WEALTH WEALTH MANAGEMENT PLANNING FINANCING • Holistic, in-depth advice from experts and solutions for every stage of a client’s life • Almost 50% of clients globally i
Slide 18: Focused Market Coverage
FOCUSED MARKET COVERAGE Essential for further organic and sustainable growth CORE MARKETS REGULAR SMALL MARKETS MARKETS • Core markets represent the vast • Maintained • Standardised and majority of total AuM coverage of efficient coverage markets with of clients in small • Targeted growth strategies
Slide 19: Growth Strategy
GROWTH STRATEGY Concentrating on proven strengths CAPITALISING ON OUR ATTRACTING TAKING ADVANTAGE OF STRONG FRANCHISE TALENT M&A OPPORTUNITIES 1 2 3 • Increase share of 2016 Smooth onboarding • Large transaction wallet through of the accelerated (Merrill Lynch IWM) hiring initiative Enhanced clien
Slide 20: International Growth – Example: Latin America
INTERNATIONAL GROWTH – EXAMPLE: LATIN AMERICA Organic growth complemented by targeted M&A Nassau Beatriz Sanchez Head Latin America Mexico City • Joined Julius Baer in 2017 from Goldman Sachs Panama City REGION LATIN AMERICA • New regional leadership • Positive business development, Lima inflows rec
Slide 21: Medium-Term Targets Unchanged
MEDIUM-TERM TARGETS UNCHANGED Adjusted results1 Medium-term FY 2016 FY 2017 H1 2017 targets (adjusted results1) Cost/income ratio2 72.0% 3 69.0% 64-68% 3 Pre-tax margin 23.8 bp 27.3 bp >30bp Net new money 4.0% 6.6% 4-6% 1 Excluding integration and restructuring expenses and the amortisation of intan
Slide 22: Content: Appendix
CONTENT Appendix Julius Bar 22
Slide 23: Scope of Presentation of Financials
SCOPE OF PRESENTATION OF FINANCIALS Financial results are presented as usual on the adjusted basis • Excluding integration and restructuring expenses and the amortisation of intangible assets related to acquisitions or divestments, as well as taxes on those respective items • Reconciliation from the
Slide 24: Reconciliation Consolidated Financial Statements
RECONCILIATION CONSOLIDATED FINANCIAL STATEMENTS1 IFRS to adjusted net profit CHF m 2015 2016 2017 Change 2017/2016 IFRS net profit attributable to shareholders of Julius Baer Group Ltd. 121.2 619.4 704.8 +14% Non-controlling interests 1.4 2.7 11.1 +307% Profit after tax per consolidated Financial S
Slide 25: Adjusted Net Profit CHF 806m – Annually incl. 2015 US provision
ADJUSTED* NET PROFIT CHF 806m Annually – including 2015 US provision** CHF m 2015 2016 2017 Change 2017 2017/2016 in % 1 Net interest and dividend income 711 877 988 +13% 30% Net commission and fee income 1,522 1,565 1,931 +23% 59% 1 Net trading income 436 332 304 -9% 9% Other ordinary results 25 78
Slide 26: Adjusted Net Profit CHF 806m – Annually excl. 2015 US provision
ADJUSTED* NET PROFIT CHF 806m Annually – excluding 2015 US provision** CHF m 2015 2016 2017 Change 2017 2017/2016 in % 1 Net interest and dividend income 711 877 988 +13% 30% Net commission and fee income 1,522 1,565 1,931 +23% 59% 1 Net trading income 436 332 304 -9% 9% Other ordinary results 25 78
Slide 27: Adjusted Half-Yearly Performance
ADJUSTED* HALF-YEARLY PERFORMANCE CHF m H1 2016 H2 2016 H1 2017 H2 2017 Change Change H2 2017 H2 17/H2 16 H2 17/H1 17 in % 1 Net interest and dividend income 510 367 566 421 +15% -26% 25% Net commission and fee income 739 826 922 1,009 +22% +9% 61% 1 Net trading income 118 215 90 214 -1% +137% 13% O
Slide 28: Detailed RWA and Capital Ratio Development
DETAILED RWA AND CAPITAL RATIO DEVELOPMENT 31.12.2016 30.06.2017 31.12.2017 31.12.2016 30.06.2017 31.12.2017 2 2 2 Basel III Basel III Basel III BIS approach / CHF m Basel III Basel III Basel III phase-in phase-in phase-in fully applied fully applied fully applied Risk-weighted positions Credit risk
Slide 29: Capital Development – Basel III Fully Applied
CAPITAL DEVELOPMENT Basel III fully applied CHF m 31.12.2016 31.12.2017 Change 30.06.2017 31.12.2017 Change Basel III Basel III Basel III Basel III last 6 fully applied fully applied fully applied fully applied months Equity at the beginning of the year 4,942 5,354 +8% 5,354 5,354 +0% Julius Baer Gr
Slide 30: Capital Development – Basel III Phase-in
CAPITAL DEVELOPMENT Basel III phase-in CHF m 31.12.2016 31.12.2017 Change 30.06.2017 31.12.2017 Change Basel III Basel III Basel III Basel III last 6 phase-in phase-in phase-in phase-in months Equity at the beginning of the year 4,942 5,354 +8% 5,354 5,354 +0% Julius Baer Group Ltd. dividend -246 -2
Slide 31: Balance Sheet – Financial Investments AFS
BALANCE SHEET – FINANCIAL INVESTMENTS AFS CHF m 31.12.2015 31.12.2016 31.12.2017 in Change vs. % 31.12.2016 Money market instruments 2,298 3,785 2,191 18% -42% Debt instruments 14,177 14,316 9,869 81% -31% Government and agency bonds 3,560 3,477 2,307 19% -34% Financial institution bonds 6,187 6,296
Slide 32: Breakdown of AuM
BREAKDOWN OF AUM Asset mix 31.12.2015 31.12.2016 31.12.2017 Equities 27% 27% 28% Bonds (including Convertible Bonds) 19% 19% 19% 1 Investment Funds 23% 24% 26% 2 Money Market Instruments 4% 3% 3% 2 Client Deposits 21% 20% 18% Structured Products 5% 5% 5% Other, including alternative investment asset
Slide 33: Julius Baer: Pure-Play Private Banking Group
JULIUS BAER: PURE-PLAY PRIVATE BANKING GROUP Well positioned for further growth KREUZLINGEN BASLE ZURICH ST. GALLEN • World’s largest pure-play private EDINBURGH ZUG LUCERNE banking Group DUBLIN KIEL BERNE LEEDS HAMBURG • Premium brand in global wealth MANCHESTER AMSTERDAM LONDON DUESSELDORF LAUSANN
Slide 34: Cautionary Statement on Forward-Looking Information
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION General which these forward-looking statements are based, except as required by This presentation by Julius Baer Group Ltd. (“the Company”) does not constitute applicable law or regulation. an invitation or offer to acquire, purchase or subscribe f
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