Julius Baer Gruppe Ag · SIX:BAER
Julius Baer Gruppe — Julius Baer Gruppe Namen — H1 2023 Earnings Presentation
43 slides from Julius Baer Gruppe's earnings presentation, Jul 24, 2023
Slide 1: HY 2023 Results
HY 2023 RESULTS 24 July 2023
Slide 2: Important information
Important information General Rounding This presentation by Julius Baer Group Ltd. (“the Company”) does not constitute an invitation or offer to acquire, purchase or Numbers presented throughout this presentation may not add up precisely to the totals provided in the tables and text due to subscribe
Slide 3: Introduction
INTRODUCTION PHILIPP RICKENBACHER, CEO 3
Slide 4: Solid performance in H1 2023, well positioned for future growth
Solid performance in H1 2023, well positioned for future growth Proven business Solid financial results and Disciplined execution of our model under uncertainty performance 2023-2025 strategy Major events in financial markets Net new money inflows Supporting growth through accelerated in Q2 strong h
Slide 5: Robust business model and clear focus position us for growth
Robust business model and clear focus position us for growth Our absolute focus on wealthy private clients provides clear advantages Julius Baer’s diversified wealth management business model has continued to prove its resilience across different economic cycles Our strategy has been validated by th
Slide 6: Financial Results H1 2023
FINANCIAL RESULTS H1 2023* EVIE KOSTAKIS, CFO *Financial Results are presented on adjusted basis – see “Scope of presentation of financial results” in the Appendix 6
Slide 7: Market environment
Market environment Dispersion in regional equity market returns, further rate hikes…but dampened volatility levels Wide variation in stock market returns | Bonds slightly positive | Weaker USD Rate hikes continued (at slower pace) Equity, bond and FX markets1 Interest rate outlook, %2 USD - Julius B
Slide 8: AuM up +4% to CHF 441bn
Development of assets under management AuM up +4% to CHF 441bn CHF bn Driven by market performance and NNM AuM currency exposure3 +17.9 +2.1 440.7 427.9 +7.1 424.1 -9.2 -1.2 23% USD CHF 49% 9% EUR Other 19% Monthly average AuM CHF 436bn • Down CHF -22bn, -5% from CHF 458bn in H1 2022 • Up CHF +7bn,
Slide 9: Net new money CHF 7.1bn
Net new money Net new money CHF 7.1bn CHF bn and NNM growth % +4.3% excl. After slow start, inflows accelerated deleveraging +4.6% +4.0% -0.5% +4.6% +3.3% Continued impact from client deleveraging 9.9 9.7 9.8 • Reflection of current market conditions 7.1 • Excluding deleveraging impact: NNM CHF 9.2b
Slide 10: Operating income: +9% YoY
Operating income Operating income: +9% YoY CHF m Benefit of higher rates more than offset decline vs. vs. in net commission/fee income H1 2022 H2 2022 2,029 +9% +2% 1,988 1,865 Net interest income: +36% to CHF 464m 464 +36% -3% • Higher rates drove significant increase in interest income on 481 Net
Slide 11: Gross margin increased by +12 bp YoY
Gross margin increased by +12 bp YoY Strong increase in interest-driven income (+15 bp), partly offset by a decrease in activity-driven income (-4 bp) +12 bp bp 93 93 87 50 47 46 81 43 44 a Net interest 77 22 21 14 Other comm. 13 10 9 8 income 6 & fee income d 15 13 Recurring c 36 38 36 36 36 Net co
Slide 12: Interest rate sensitivity: rate-hike benefits matched by deposit shifts
Interest rate sensitivity assuming +/-100 bp parallel shift1 Interest rate sensitivity: rate-hike Estimated gross margin impact (bp) Assumed decrease in current accounts balance benefits matched by deposit shifts (into call/time deposits) Interest-driven income gross margin stabilising $ -1 -4 +3 +2
Slide 13: Operating expenses: +5% YoY
Adjusted operating expenses Operating expenses: +5% YoY CHF m Cost/income ratio improved to 65%, despite vs. vs. H1 2022 H2 2022 increased investments in growth 1,385 +5% +4% 1,323 1,331 Depreciation/ 108 +14% -2% 95 110 amortisation Personnel expenses: +5% to CHF 881m General 396 +2% +4% 387 379 •
Slide 14: Adjusted net profit: +14% YoY
Adjusted net profit Adjusted net profit: +14% YoY CHF m Strong start into the new strategic cycle 573 541 476 Compared to H1 2022 37 34 • Adj. PBT: +19% to CHF 644m 30 • Adj. pre-tax margin: +6 bp to 30 bp Adjusted pre-tax margin (bp) 31 30 • Adj. EPS attributable to shareholders: +16% to CHF 2.63 R
Slide 15: Liquid balance sheet – Low risk profile
Liquid balance sheet – Low risk profile 12% in cash | Loan-deposit ratio 62% | 56% of deposits in term/call deposits Balance sheet CHF bn Assets Liabilities/Equity (in brackets: figures as at 100.2 (105.6) 100.2 (105.6) 31 Dec 2022) 5.8 (3.3) Due to banks1 Due from banks1 9.5 (5.4) 42.8 (44.6) Lomba
Slide 16: CET1 ratio strengthened to 15.5%
CET1 ratio strengthened to 15.5% Strong net profit generation | Initial pull-to-par effect in H1 2023 BIS CET1 capital ratio1 (CHF bn) Linear estimate of OCI pull-to-par of unrealised losses on treasury bonds CET1 3.0 0.5 -0.3 -0.1 0.1 0.1 3.3 RWA 21.7 -0.3 21.4 15.5% 2022 H1 2023 H2 2023 2024 2025
Slide 17: Tier 1 leverage ratio up to 5.1%
Tier 1 leverage ratio1 Tier 1 leverage ratio up to 5.1% CHF bn Tier 1 4.6 0.5 -0.3 -0.1 0.1 0.3 0.1 5.2 Tier 1 capital Leverage -4.3 106.5 102.2 exposure • BIS tier 1 capital +13%, mainly from capital generation and new AT1 0.1% 5.1% issuance2 0.3% -0.3% 0.5% 0.1% 0.2% 4.3% -0.1% Leverage exposure •
Slide 18: Strategic Progress
STRATEGIC PROGRESS PHILIPP RICKENBACHER, CEO 18
Slide 19: On track with implementing our strategy 2023-25
On track with implementing our strategy 2023-25 FOCUS SCALE INNOVATE Further driving sustainable profit growth with an Driving the next phase of profitable growth Digitalising and innovating in wealth management and evolution of our pure wealth management model beyond for the benefit of our clients
Slide 20: Focusing on organic growth through strong hiring momentum
Focusing on organic growth through strong hiring momentum Attracting top talent from local and international wealth management champions as employer of choice Strong hiring momentum Ongoing sharp focus on high-quality hires + 57 RM net hires in Confirming attractiveness to top talent and success of
Slide 21: Investing in our global footprint as testament to our growth ambitions
Investing in our global footprint as testament to our growth ambitions Focus on UK Middle East client proximity Moved to new location in Further build our Germany London in H1 2023 presence in Qatar New UK office planned Commitment to our for H2 2023 Iberia Switzerland Hong Kong locations and market
Slide 22: Developing and training our client-facing workforce
Developing and training our client-facing workforce to meet tomorrow's needs Graduate Associate RM Further Front RM succession programme programme development planning • Attract top talent from • Launch of a dedicated • More than 350 • Pro-active and universities with our programme to create Assista
Slide 23: Constantly refining our client value proposition
Constantly refining our client value proposition New solutions and platforms relevant for our clients Launching of and strong inflows in Further adding and diversifying Enabling and enhancing tailored new in-house funds (e.g. JB our private equity solutions Markets solutions (e.g. Markets Global Inc
Slide 24: Further delivering along our result-oriented sustainability strategy
Further delivering along our result-oriented sustainability strategy Sustainability Report 2022 and Executive Summary published on 20 March 2023 Climate strategy Client ESG Reporting Rating In-house expertise Launched new Named Best Private Bank Improved Morningstar Sustainability Front stewardship
Slide 25: Digitalising wealth management along the value chain
Digitalising wealth management along the value chain Efficient Technology-supported Digitally operations Relationship Managers enabled clients Fully scalable Creating operating leverage in the State-of-the-art backend business model client delivery Core banking and trading Data platform Client lifec
Slide 26: Clear priorities for H2 2023
Clear priorities for H2 2023 Continue strategic delivery of FOCUS-SCALE-INNOVATE milestones Maintain hiring momentum and drive further growth in focus markets Strengthen our offering with focus on driving recurring revenues Finalise design and kick-off implementation of key technology investments Ma
Slide 27: Julius Bar
Julius Bar
Slide 28: Q&A
Q&A Philipp Rickenbacher, CEO Evie Kostakis, CFO 28
Slide 29: Appendix
APPENDIX 29
Slide 30: Scope of presentation of financial results
Scope of presentation of financial results As in previous years, financial results and analysis are presented on adjusted basis • Adjusted: Excluding expenses related to acquisitions or divestments (M&A-related expenses) and the taxes on those respective items • In H2 2022, the M&A-related expenses
Slide 31: APMs and other definitions used in presentation
APMs and other definitions used in presentation APMs Gross margin Operating income divided by monthly average AuM1 Adjusted cost/income ratio Adjusted operating expenses excluding adjusted provisions and losses, divided by operating income Adjusted expense margin Adjusted operating expenses, excludi
Slide 32: Adjusted financials & medium-term targets
Julius Baer Group Ltd. Adjusted financials & medium-term targets Medium-term targets H1 2023 H1 2022 H2 2022 vs. H1 2022 vs. H2 2022 <64% Cost/income ratio 65.3% 67.0% 65.0% -1.7% pt +0.4% pt by 2025 28-31 bp Pre-tax margin 29.5 bp 23.7 bp 30.6 bp +5.9 bp -1.1 bp by 2025 >10% growth p.a. Profit befo
Slide 33: Reconciliation consolidated financial statement
Reconciliation consolidated financial statement1 IFRS to adjusted net profit CHF m H1 2023 H1 2022 H2 2022 IFRS net profit attributable to shareholders of Julius Baer Group Ltd. 531.8 450.6 499.0 Non-controlling interests -0.4 -0.3 -0.2 IFRS net profit 531.4 450.3 498.8 Total adjustments to personne
Slide 34: Adjusted half-yearly performance 2022-23
Adjusted half-yearly performance 2022-23 CHF m H1 2023 H1 2022 H2 2022 vs. H1 2022 vs. H2 2022 H1 2023 in % Net interest income 464 342 481 +36% -3% 23% Net commission and fee income 963 1,045 917 -8% +5% 47% Net income from financial instruments measured at FVTPL 596 474 577 +26% +3% 29% Other inco
Slide 35: Capital development
Capital development Basel III, CHF m 30.06.2023 31.12.2022 30.06.2022 vs. 31.12.2022 Equity at the beginning of the period 6,290 6,743 6,743 -7% Julius Baer Group Ltd. dividend -536 -554 -554 Net profit (IFRS) 532 950 451 Capital reduction -400 -450 -450 Change in treasury shares 340 333 431 Treasur
Slide 36: Detailed RWA and capital ratio development
Detailed RWA and capital ratio development BIS CET1 capital ratio BIS approach, Basel III, CHF m 30.06.2023 31.12.2022 30.06.2022 vs. 31.12.2022 15.0% 15.5% 14.0% Risk-weighted positions +4.0% +4.5% Buy-back threshold ~14.0% +3.0% Credit risk 12,758 12,986 12,960 -228 Group floor 11.0% +3.1% +2.8% +
Slide 37: Balance sheet – financial assets (OCI)
Balance sheet – financial assets (OCI) Financial assets measured at fair value through OCI as % vs. CHF m 30.06.2023 31.12.2022 30.06.2022 of total 31.12.2022 Debt instruments 11,147 13,152 13,564 99% -15% Government and agency bonds 3,398 4,456 4,941 30% -24% Financial institution bonds 5,363 6,056
Slide 38: Balance sheet – financial assets (AC)
Balance sheet – financial assets (AC) Debt financial assets measured at amortised cost as % vs. CHF m 30.06.2023 31.12.2022 30.06.2022 of total 31.12.2022 Government and agency bonds 3,099 2,098 2,034 59% +48% Financial institution bonds 1,751 1,334 860 33% +31% Corporate bonds 419 370 90 8% +13% De
Slide 39: Mandate penetration
Mandate penetration Total mandate penetration1 29% 31% 45% 48% 51% 54% 56% 56% 56% 56% Advisory 13% 15% 29% 31% 35% 38% 39% 39% Discretionary 16% 40% 40% 15% 16% 16% 16% Targeted discretionary 16% 16% 17% 17% 17% mandate penetration by 2025: 25% Others (incl. intermediaries, 71% 69% self-directed, o
Slide 40: Increase in relationship managers
Increase in relationship managers While maintaining high productivity Development of number of relationship managers (RM) and AuM per RM 338 +21% 278 Efficiency/productivity measures +1051 1,396 -342 +57 1,305 +454 -91 -103 -713 2017 2018 2019 2020 2021 H1 2022 H2 2022 H1 2023 30.06.2023 1 Incl. +13
Slide 41: Breakdown of AuM
Breakdown of AuM Asset mix 30.06.2023 30.06.2022 31.12.2022 Equities 31% 31% 31% Bonds (including convertible bonds) 15% 14% 15% Investment funds 1 29% 29% 28% Money market instruments 4% 2% 5% Client deposits 15% 19% 16% Structured products 5% 4% 4% Precious metals 1% 1% 1% Total 100% 100% 100% Cur
Slide 42: Julius Baer: Pure-play wealth management group
Julius Baer: Pure-play wealth management group Who we are Europe Switzerland Basel • World’s largest pure wealth management group, with Edinburgh Zurich St.Gallen Belfast premium brand Dublin Leeds Kiel Luzern Manchester Hamburg Berne London Berlin • Client-centric approach Guernsey Düsseldorf Frank
Slide 43: Julius Bar
Julius Bar
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