Julius Baer Gruppe AG · SIX:BAER
Julius Baer Gruppe — Julius Baer — FY2005 Earnings Presentation
52 slides from Julius Baer Gruppe's earnings presentation, Feb 16, 2006
Slide 1: 2005 Results and Outlook Presentation
Julius Baer 2005 Results and Outlook Presentation 16 February 2006 Zurich
Slide 2: Program
Program Introduction Johannes A. de Gier, President and Chief Executive Officer 2005 Financial Results Andrew Wills, Group Financial Controller Asset Management David M. Solo, CEO Asset Management Private Banking Alex W. Widmer, CEO Private Banking Outlook Johannes A. de Gier Q & A Session 2
Slide 3: Swift Integration Process (1)
Swift Integration Process (1) Group Detailed organizational structure of Private Banking, Asset Management and Corporate Center established Cost synergies well on track Major part of forecasted restructuring costs charged in 2005 Private Banking and Asset Management are actively pursuing the
Slide 4: Swift Integration Process (2)
Swift Integration Process (2) Private Integration of private banks well on track Banking Rebranding of different legal entities already started Prioritization of full exploitation of combined business potential over migration of ‘old’ Julius Baer to new IT platform Strategy in place to inves
Slide 5: Pure-Play Wealth Manager with Two Distinct Businesses
Pure-Play Wealth Manager with Two Distinct Businesses Julius Baer AuM: CHF 304bn Private Banking Asset Management AuM: AuM: CHF 122bn CHF 182bn 5
Slide 6: Julius Baer: Some Key Figures
Julius Baer: Some Key Figures old new 2004 2005 Assets under management (CHF) 135bn 304bn Shareholders‘ equity (CHF) 1.5bn 6.2bn BIS Tier 1 ratio (%) 17.7 12.7 Number of employees 1,840 3,427 - of which in Switzerland 1,434 2,465 # of countries/locations present in 11/19 18/31 Market capitalization
Slide 7: Program
Program Introduction Johannes A. de Gier, President and Chief Executive Officer 2005 Financial Results Andrew Wills, Group Financial Controller Asset Management David M. Solo, CEO Asset Management Private Banking Alex W. Widmer, CEO Private Banking Outlook Johannes A. de Gier Q & A session 7
Slide 8: Julius Baer Group Assets Under Management (AuM)
Julius Baer Group Assets Under Management (AuM) CHFbn 350 31 304 300 16 128 SBC PB 58 250 GAM 200 73 150 135 100 -6 JB 173 50 0 31.12.04 Div estm. Acquisition NNM Market perf. 31.12.05 US PB 8
Slide 9: Julius Baer Group AuM – pro forma
Julius Baer Group AuM – pro forma CHFbn yoy increase Overall +28% 350 PB +17% AM +36% 48 304 300 244 18 250 122 -6 200 110 150 100 182 134 50 0 31.12.04 Div estm. US NNM Market perf. 31.12.05 PB Asset Management Private Banking 9
Slide 10: Julius Baer Group Net New Money – pro forma
Julius Baer Group Net New Money – pro forma CHFbn 40 35 32 30 25 20 17 18 34 15 7 10 17 19 5 10 0 -2 -1 -3 -5 31.12.02 31.12.03 31.12.04 31.12.05 10 Asset Management Private Banking
Slide 11: Julius Baer Group AuM – pro forma
Julius Baer Group AuM – pro forma CHFbn +71% over 3 years 350 304 300 250 244 122 209 200 177 110 150 110 99 100 182 134 50 99 78 0 31.12.02 31.12.03 31.12.04 31.12.05 Asset Management Private Banking 11
Slide 12: “New” Julius Baer Consolidated 2005 pro forma Results
“New” Julius Baer Consolidated 2005 pro forma Results CHFm 2005 1 2004 Change Change in % Assets under Management 304'322 243'453 60'869 25% Operating income 2'521.2 2'132.6 388.6 18% Operating expenses 1'676.1 1'444.0 232.1 16% Net profit before taxes 845.1 688.6 156.5 23% Net profit 640.8 538.1 10
Slide 13: “New” Julius Baer Consolidated 2005 pro forma Results
“New” Julius Baer Consolidated 2005 pro forma Results 20051 2004 RoA in bps 92.9 94.2 CoA in bps 61.8 63.8 RoE in % 21.1 19.8 EPS in CHF 5.7 4.8 1 Excludes amortization of intangible assets, integration and restructuring costs and impact of sale of US PB. 13
Slide 14: Financial Highlights “Old” Julius Baer 2005 / 2004
Financial Highlights “Old” Julius Baer 2005 / 2004 1 JB only CHFm 2005 2004 Change Change in % Assets under Management 173'563 135'370 38'193 28% Operating income 1'245.0 1'032.2 212.8 21% Operating expenses 982.3 774.4 207.9 27% Net profit before taxes 262.7 257.8 4.9 2% Net profit 202.7 207.9 -5.2
Slide 15: Swift Integration Process
Swift Integration Process Cost Confirmation of cost synergy potential synergies On track for CHF 100m p.a. pre-tax Private banking back-office/IT is main source of synergies Staff reductions by 2007; implementation started Revenue Revenue synergies synergies CHF 55m p.a. of additional pr
Slide 16: Program
Program Introduction Johannes A. de Gier, President and Chief Executive Officer 2005 Financial Results Andrew Wills, Group Financial Controller Asset Management David M. Solo, CEO Asset Management Private Banking Alex W. Widmer, CEO Private Banking Outlook Johannes A. de Gier Q & A session 16
Slide 17: Asset Management AuM
Asset Management AuM CHFbn 200 20 182 180 17 160 71 140 120 100 74 80 60 40 20 0 31.12.2004 Acquisition NNM Performance 31.12.2005 17
Slide 18: Asset Management Facts and Figures: Client Type
Asset Management Facts and Figures as of December 31, 2005 The combined Assets under AuM Breakdown by client type Management total CHF 182.1bn of Julius Baer AM 5.90% Julius Baer AM GAM 40.40% Institutional Ext. Distribution JB PB 40% 53.70% 60% AuM Breakdown by client type of GAM 14.60% 17.10% In
Slide 19: Julius Baer Asset Management Facts and Figures: Product Type
Julius Baer Asset Management Facts and Figures as of December 31, 2005 The combined Assets under AuM Breakdown by product type Management total CHF 182.1bn of Julius Baer AM 18.80% Julius Baer AM GAM Equity Long 6.00% Bond Long Hedge 52.00% PLF 40% 23.20% 60% AuM Breakdown by product type of GAM 2
Slide 20: Asset Management 2005 pro forma Results
Asset Management 2005 pro forma Results (in CHFm) JB AM GAM TAS Pro forma Revenues 542.0 713.0 142.9 1397.9 Costs 368.5 367.3 78.6 814.4 Net profit before tax 173.5 345.7 64.3 583.5 Revenue margin bps 60.2 108.5 n.a. 80.6 Revenue margin ex 55.4 94.1 n.a. 71.7 performance fees bps Cost/income ratio %
Slide 21: Asset Management Integration (1)
Asset Management Integration (1) Relatively Modest Functional Integration All JB fund of hedge fund activity incorporated into GAM Multi-Manager. Creation of single combined sales organization for GAM and JB. Relocation of GAM USA to JB premises. Integration of support services (HR, Legal,
Slide 22: Asset Management Integration (2)
Asset Management Integration (2) Products GAM to become main provider of hedge fund services to PB. New custom products and advisory services being developed. Within open architecture model, in-house GAM funds, as well as JB funds, to be properly positioned and emphasized within Private Bank
Slide 23: Asset Management Integration (3)
Asset Management Integration (3) Realized Cost Synergies (annualized) NY Support Integration CHF 3.5m NY Premises Consolidation CHF 1.8m JB FoHF Integration into GAM CHF 5.5m GAM US Eq Consolidation to JB CHF 2.0m Markets - Exit Institutional Equities CHF 6.0m Markets - Exit Capital Ma
Slide 24: Asset Management Performance Overview
Asset Management Performance Overview GAM – Strong 2005 performance re-affirms premium brand. >75% of GAM Long only funds above benchmarks for 1, 2, 3, 5 years. >75% of GAM in-house hedge funds performing strongly. Multi-Manager strategies performed well above median. 9 Trading still lack-lu
Slide 25: Asset Management Initiatives 2006 (1)
Asset Management Initiatives 2006 (1) JB Asset Management US Continue building on successful 2005 launch of IE Fund 2 (AuM $2.8b). Promote 4-Star High-Yield product globally given 3-year record. Develop range of US Equity Funds. Continue development work on central Europe private equity.
Slide 26: Asset Management Initiatives 2006 (2)
Asset Management Initiatives 2006 (2) GAM Develop high-quality specialist coverage for Private Bank to begin education and promotion of GAM products. Maintain highest quality service to UBS organization. Continued investment in UK, Channel Island, & Bermuda distribution. Invest in combined
Slide 27: Asset Management Operational Targets 2008
Asset Management Operational Targets 2008 Division RoA and Cost/Income are blends from distinct businesses Overall result determined by relative growth of each business. Key business objective is to run each business profitably with competitive relative margins, not to manage the blended ratio
Slide 28: Program
Program Introduction Johannes A. de Gier, President and Chief Executive Officer 2005 Financial Results Andrew Wills, Group Financial Controller Asset Management David M. Solo, CEO Asset Management Private Banking Alex W. Widmer, CEO Private Banking Outlook Johannes A. de Gier Q & A session 28
Slide 29: Private Banking AuM
Private Banking AuM CHFbn 140 122 11 120 57 100 -1.5 80 61 60 -6 40 20 0 31.12.04 Divestm. Acquisition NNM Perf. 31.12.05 US PB of SBC WM Private Banks* * EvE: CHF 23bn; FL: CHF 18bn; BdL: CHF 16bn 29
Slide 30: Private Banking 2005 pro forma Results
Private Banking 2005 pro forma Results in CHFm, unless otherwise stated JB PB SBC Pro forma Revenues 470.1 580.7 1,050.8 Costs 371.0 326.8 697.8 Net profit before tax 99.1 253.9 353.0 Revenue margin bps 77.3 108.7 91.4 Cost/income ratio % 71.6 54.8 62.3 Excludes amortization of intangible assets, in
Slide 31: Julius Baer Private Banking Mission/Vision
Julius Baer Private Banking Mission/Vision Our aim is to become one of the world’s premier private banks by Being the first call private bank for both clients (large share of wallet) and employees (employer of choice) Taking an extreme client-centric approach by listening, understanding and resp
Slide 32: Julius Baer Private Banking – Organizational Setup
Julius Baer Private Banking – Organizational Setup CEO Private Banking A. W. Widmer Infidar Th. Fedier COO B. Collardi CIO G. Piasko Region 1 Region 2 Region 3 Region 4 Region 5 Wealth Mgmt. IT / Operations J.-M. de Solutions B. Keller Charrière J.-P. Klumpp G. Raitzin Th. R. Meier M. Gonseth J. Pul
Slide 33: Main Priorities of Julius Baer Private Banking
Main Priorities of Julius Baer Private Banking Become employer of choice for top PB talents Create a unique performance culture Maintain rapid pace of Foster a team-based operating integration model Focus on… – Client and employee Stop AuM outflows in on retention core markets ati G gr
Slide 34: Private Banking Division Opted for Smooth yet Rapid Integration Approach
Private Banking Division Opted for Smooth yet Rapid Integration Approach 2005 2006 2007 Q4 Q1 Q2 Q3 Q4 Q1 Q2 03/01/06 Legal merger Rebranding (retroactive on 01/07) Technical migration Legal merger Technical (retroactive on migration 01/06) Legal merger Technical (retroactive on migration 01/06) New
Slide 35: Key Success Factors for Integration and Main Achievements to Date
Key Success Factors for Integration and Main Achievements to Date Fast and New organization structure defined and all employees allocated by smooth end of 2005 migration Legal merger activities and re-branding on track SBC WM banks to be migrated onto existing JB IT platform to simplify and ac
Slide 36: Unique Cultural Heritage of New Julius Baer in Switzerland
Unique Cultural Heritage of New Julius Baer in Switzerland Reinforce position in Swiss home market with Swiss domestic and Cantrade 1952 Bank Ehinger European offshore Julius Baer 1890 clients 1810 Leverage unique Basel Zurich Swiss heritage with Armand von Ernst Bank Falck & Co roots in all par
Slide 37: Key Priorities in European Onshore Markets
Key Priorities in European Onshore Markets Continue build-up of Germany onshore presence - Special operating model in terms of IT/Operations outsourcing and product platform - Frankfurt and three branches operational (Hamburg, Düsseldorf, Stuttgart) Establish (non-bank) onshore presence for Ital
Slide 38: Growth Markets – Main Focus of PB Investment Program
Growth Markets – Main Focus of PB Investment Program Central and Eastern Europe Asia excluding Japan Further strengthen marketing teams operating Upgrade Singapore license and strengthen out of Zurich and Geneva global booking platform for international Establish marketing offices in Eastern E
Slide 39: Gross Margin Target
Gross Margin Target Gross margin (bp) – current 2005 vs. target 2008 Priorities to achieve target Increase penetration of actively managed products 108 >100 Set up Advisory concept 91 77 and Investment Consulting network Leverage GAM’s investment expertise into comprehensive product offering
Slide 40: Broad Range of Services Available for Clients
Broad Range of Services Available for Clients Julius Baer Client Base Relationship Manager Portfolio Trust, fiduci- Advisory Wealth Credit & Other Management ary & Family Services Engineering Leverage Products Services Office serv. Absolute Return Regular Customized Trusts & Lombard loans
Slide 41: Discretionary Product Offering
Discretionary Product Offering Introduction of a new range of discretionary mandates leveraging GAM expertise JB Absolute Return Managed by GAM with absolute Absolute Classic Special return focus (pilot has already Return Relative and started) Mandates Return Theme JB Relative Return Mandates Ma
Slide 42: People – Approach and Key Initiatives
People – Approach and Key Initiatives Our approach to people management Key initiatives We employ the best people by being the Install new extremely client-centric employer of choice JBPB culture across the merged entity We value entrepreneurship, meritocracy and teamwork and we care for our p
Slide 43: Private Banking Operational Targets
Private Banking Operational Targets 2005 2008 pro forma target Net New Money -1% 3-5% Gross (revenue) margin 91bps >100bps Cost/income ratio 62% ~60% 43
Slide 44: Program
Program Introduction Johannes A. de Gier, President and Chief Executive Officer 2005 Financial Results Andrew Wills, Group Financial Controller Asset Management David M. Solo, CEO Asset Management Private Banking Alex W. Widmer, CEO Private Banking Outlook Johannes A. de Gier Q & A session 44
Slide 45: Key Financial Targets 2008 (Summary)
Key Financial Targets 2008 (Summary) Revenue Private Banking: >100bps margin Asset Management (combined): 75bps Cost/Inco- Private Banking: ~60% me ratio Asset Management: <60% (excluding “Markets” area) Amorti- Amortization of intangible assets amounting to CHF 1,747m over the next 10 yea
Slide 46: Our Long-term Vision
Our Long-term Vision Client-centric, holistic and open private banking business model aiming to deliver highest quality products, services and solutions Asset management to be best-in-class across all key product areas and provide attractive cross-selling opportunities Switzerland’s largest pu
Slide 47: Program
Program Introduction Johannes A. de Gier, President and Chief Executive Officer 2005 Financial Results Andrew Wills, Group Financial Controller Asset Management David M. Solo, CEO Asset Management Private Banking Alex W. Widmer, CEO Private Banking Outlook Johannes A. de Gier Q & A session 47
Slide 48: Appendix
Julius Bar Appendix
Slide 49: Financial Highlights Group 2005 / 2004
Financial Highlights Group 2005 / 2004 1 CHFm 2005 2004 Change Change in % Assets under Management 304'322 135'370 168'952 125% Operating income 1'443.0 1'032.2 410.8 40% Operating expenses 1'076.3 774.4 301.9 39% Net profit before taxes 366.7 257.8 108.9 42% Net profit 281.6 207.9 73.7 35% Cost/inc
Slide 50: Financial Highlights Group 2005 / 2004
Financial Highlights Group 2005 / 2004 (in CHFm) 2004 2005 Integration & impact of sale amortization normalized JB only per FS per FS restructuring of US PB 2005 2005 Net interest income 120.8 127.9 127.9 119.7 Results from comm./fees 780.6 1'132.8 1'132.8 952.6 Result from trading op. 129.0 148.9 1
Slide 51: “New” Julius Baer Consolidated 2005 pro forma Results
“New” Julius Baer Consolidated 2005 pro forma Results 1 (in CHFm) proforma proforma 2005 2004 AM PB CC Total Operating income 2'132.6 1'397.9 1'050.8 72.5 2'521.2 Operating expenses 1'444.0 814.4 697.8 163.9 1'676.1 Net profit before taxes 688.6 583.5 353.0 -91.4 845.1 Taxes 150.5 204.3 Net profit 5
Slide 52: Disclaimer
Disclaimer C A U T IO N A R Y S TAT E M E N T R E G A R D IN G F O R W A R D -L O O K IN G IN F O R M AT IO N T h is p re s e n ta tio n m a y c o n ta in p ro je c tio n s o r o th e r fo r w a rd -lo o k in g s ta te m e n ts r e g a rd in g f u tu r e f in a n c ia l p e rfo rm a n c e a n d r e