Julius Baer Gruppe AG · SIX:BAER
Julius Baer Gruppe — Julius Baer Group — FY2015 Earnings Presentation
35 slides from Julius Baer Gruppe's earnings presentation, Feb 1, 2016
Slide 1: FY 2015 Results and Business Update
FY 2015 RESULTS AND BUSINESS UPDATE Presentation for Investors, Analysts & Media Zurich, 1 February 2016
Slide 2: 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
Slide 3: Content
CONTENT Introduction Boris F.J. Collardi, CEO Financial Results FY 2015 Dieter A. Enkelmann, CFO Business Update Boris F.J. Collardi, CEO Appendix 3
Slide 4: Progress on Many Fronts
PROGRESS ON MANY FRONTS AuM at record CHF 300 billion • AuM at CHF 300bn, up 3% (despite negative currency impact) Strongly • Net new money of CHF 12.1bn (>4%), from all regions improved • Gross margin maintained at 94bps operating result • Cost/income ratio1 improved to 67.2% (2014: 69.9%) leading
Slide 5: Content
CONTENT Introduction Boris F.J. Collardi, CEO Financial Results FY 2015 Dieter A. Enkelmann, CFO Business Update Boris F.J. Collardi, CEO Appendix 5
Slide 6: 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 amortisation of intangible assets related to previous acquisitions or divestments, as well as taxes on those respective items • In order to ensure
Slide 7: AuM Development Impacted by CHF Strengthening
AUM DEVELOPMENT IMPACTED BY CHF STRENGTHENING Elevated stock market volumes and FX volatility in H1 – came down in H2 Development of EUR/CHF and USD/CHF – 2015 (daily)1 Average exchange rates for AuM breakdown by 2015 and 2014 currency (31.12.2015) 1.20 1.20 EUR/CHF 2015 2014 USD/CHF CHF 1.10 1.10 E
Slide 8: AuM up CHF +9bn (+3%) to CHF 300bn
AUM UP CHF +9bn (+3%) TO CHF 300bn Despite negative FX impact of -3% Development of Assets under Management CHF bn • AuM CHF 300bn, +3% 7.4 -0.9 -9.5 – Net new money CHF +12.1bn 12.1 299.7 290.6 – Net acquisitions1 CHF +7.4bn – Market performance CHF -0.9bn – Currency impact CHF -9.5bn 254.4 • Avera
Slide 9: IWM: AuM Development
IWM: AUM DEVELOPMENT Asset transfers completed, within target range IWM asset transfer (value at applicable transfer dates)* Applicable local closings of the CHF bn transaction in 2013: 24.3 52.8 54.5 53.8 52.0 58.6 • Feb: Merrill Lynch Bank Switzerland • April: Uruguay1, Chile1, Luxembourg1, 2.4 Mo
Slide 10: Net New Money 4.2% – Within Target Range
NET NEW MONEY 4.2% – WITHIN TARGET RANGE Despite ongoing tax regularisations Net New Money in CHF bn and %1 • NNM of CHF 12.1bn or 4.2%1 3.6% 3.8% 5.9% 3.8% 4.5% 3.9% • Net inflows from all regions, with strong 7.5 contributions from Asia, the Middle East 6.5 and Israel, as well as the domestic 5.6
Slide 11: Operating Income +6% to CHF 2.7bn
OPERATING INCOME +6% TO CHF 2.7bn Supported by strong growth in trading income CHF m vs. 2014 Net commission/fee income flat to CHF 1,522m1 • Brokerage income impacted by lower client risk 2,694 +6% 2,547 25 appetite in H2 -54% 53 2,195 436 +33% 328 Net interest/dividend income +10% to CHF 711m 51 •
Slide 12: Gross Margin Remained at 94 bps
GROSS MARGIN REMAINED AT 94 BPS1,2 Increased client activity in H1 followed by significant moderation in H2 2013 2014 2015 • Net commission/fee income 53bps 96bps 94bps 94bps (-3bps vs. 2014; H2 2015 -6bps vs. H1 2015) 102 99 95 93 • Net interest income2 20bps 91 88 (-1bp vs. 2014; H2 2015 +3bps vs.
Slide 13: Operating Expenses +30% to CHF 2.4bn
OPERATING EXPENSES1 +30% TO CHF 2.4bn Excluding US provision: +1% to CHF 1,864m Personnel expenses +2% to CHF 1,207m CHF m vs. 2014 • Well below growth in revenues and avg AuM 2,385 +30% • Average #FTEs relevant for adjusted expenses: unchanged, reflecting IWM 521 transaction-related net reductions
Slide 14: Adjusted Net Profit 2015 Down 52% to CHF 279m
ADJUSTED NET PROFIT 2015 DOWN 52% TO CHF 279m Excluding US provision: +20% to CHF 701m CHF m 2013 2014 2015 Change 2015/2014 Operating income 2,195 2,547 2,694 +6% Adjusted operating expenses 1,611 1,840 2,385 +30% Adjusted profit before taxes 583 706 309 -56% Adjusted pre-tax margin (bps) 25.5 25.9
Slide 15: Reconciliation Consolidated Financial Statement 2015 to Adjusted and Underlying Net Profit
RECONCILIATION CONSOLIDATED FINANCIAL STATEMENT 20151 TO ADJUSTED AND UNDERLYING NET PROFIT CHF m 2013 2014 2015 Change 2015/2014 Profit after tax per consolidated Financial Statements (IFRS) 187.8 367.4 122.5 -67% Amortisation of intangible assets related to the UBS transaction 74.0 74.0 67.8 -8% A
Slide 16: Solid Balance Sheet – Low Risk Profile
SOLID BALANCE SHEET – LOW RISK PROFILE CHF bn Liabilities Assets CHF 84.1bn & Equity (CHF 82.2bn)* 6.9 (8.9) 4.7 (5.2) Due to banks Due from banks Loan-to- deposit ratio 0.56 (0.54) Loans (incl. lombard lending and 36.4 (33.7) mortgages to private clients) 64.8 (61.8) Due to customers (incl. client
Slide 17: 19.4% BIS Total Capital Ratio
19.4% BIS TOTAL CAPITAL RATIO 31.12.2013 31.12.2014 31.12.2015 31.12.2013 31.12.2014 31.12.2015 BIS approach / CHF m Basel III 3 Basel III 3 Basel III 3 Basel III Basel III Basel III fully applied fully applied fully applied Risk-weighted positions Credit risk 10,664 12,207 13,775 11,181 12,599 14,0
Slide 18: Updated Capital and Dividend Framework
UPDATED CAPITAL AND DIVIDEND FRAMEWORK Following US provision and completion of IWM integration Regulatory capital requirements (phase-in)1: Julius Baer floors (phase-in): − BIS total capital ratio >12.2 % − BIS total capital ratio >15% − BIS tier1 capital ratio > 9.8% -------------------- − BIS CET
Slide 19: New Medium-Term Targets
NEW MEDIUM-TERM TARGETS CIR target reset to 64 - 68% (from 65 – 70%) FY 2015 H2 2015 New Medium-Term Targets Cost/Income 67.2% 69.9% 64-68% Ratio1 Pre-Tax Profit 28.8bps 25.8bps >30bps Margin2 Net New 4.2% 3.9% 4-6% Money3 • Updated targets following evaluation of recent operating performance, mediu
Slide 20: Content
CONTENT Introduction Boris F.J. Collardi, CEO Financial Results FY 2015 Dieter A. Enkelmann, CFO Business Update Boris F.J. Collardi, CEO Appendix 20
Slide 21: A World of Challenges and Opportunities
A WORLD OF CHALLENGES AND OPPORTUNITIES Best placed to continue to take advantage of our environment Financial Markets Regulatory Competition Environment Clients 21
Slide 22: Entering Next Phase of Growth from a Position of Strength
ENTERING NEXT PHASE OF GROWTH FROM A POSITION OF STRENGTH • Successfully closed landmark IWM transaction The end of an • Final agreement with the DOJ, pending court hearing intense phase • Regularisation of European legacy business mostly completed of transformation CHF 300bn AuM, >50 locations, >
Slide 23: Julius Baer
Julius Bar
Slide 24: Content
CONTENT Introduction Boris F.J. Collardi, CEO Financial Results FY 2015 Dieter A. Enkelmann, CFO Business Update Boris F.J. Collardi, CEO Appendix 24
Slide 25: IWM: Integration Costs
IWM: INTEGRATION COSTS Transaction, restructuring & integration costs estimate revised down to CHF ~420m1 Update and estimated breakdown over time Pre-tax, CHF m ~420 51 Transaction ~25% ~25% costs IT costs 193 ~35% (incl. on- ~35% boarding) ~30% 109 Incentives ~30% ~10% 29 Others ~10% ~38 Total 201
Slide 26: More Than 1,200 Relationship Managers
MORE THAN 1,200 RELATIONSHIP MANAGERS Net +62 RMs in 2015 +391 +69 -7 1,217 -42 +43 +11 +85 667 2009 2010 2011 2012 2013 2014 Net Net IWM 2 2015 Joiners 1 1 Including net hiring of +40 RMs, +23 RMs from Leumi PB and +6 RMs from Fransad 2 Including +33 RMs in India 26
Slide 27: Adjusted Net Profit CHF 279m
ADJUSTED* NET PROFIT CHF 279m CHF m 2013 2014 2015 Change 2015 2015/2014 in % Net interest and dividend income 1 552 648 711 +10% 26% Net commission and fee income 1,277 1,518 1,522 +0% 57% 1 Net trading income 315 328 436 +33% 16% Other ordinary results 51 53 25 -54% 1% Operating income 2,195 2,547
Slide 28: Underlying Net Profit CHF 701m
UNDERLYING* NET PROFIT CHF 701m CHF m 2013 2014 2015 Change 2015 2015/2014 in % Net interest and dividend income 1 552 648 711 +10% 26% Net commission and fee income 1,277 1,518 1,522 +0% 57% 1 Net trading income 315 328 436 +33% 16% Other ordinary results 51 53 25 -54% 1% Operating income 2,195 2,5
Slide 29: Adjusted Financial Performance
ADJUSTED* FINANCIAL PERFORMANCE Half-yearly CHF m H2 2014 H1 2015 H2 2015 Change Change H2 2015 H2 15/H2 14 H2 15/H1 15 in % Net interest and dividend income 1 301 384 327 +9% -15% 25% Net commission and fee income 772 792 730 -5% -8% 57% 1 Net trading income 212 217 219 +3% +1% 17% Other ordinary r
Slide 30: Underlying Financial Performance
UNDERLYING* FINANCIAL PERFORMANCE Half-yearly CHF m H2 2014 H1 2015 H2 2015 Change Change H2 2015 H2 15/H2 14 H2 15/H1 15 in % Net interest and dividend income 1 301 384 327 +9% -15% 25% Net commission and fee income 772 792 730 -5% -8% 57% Net trading income 1 212 217 219 +3% +1% 17% Other ordinary
Slide 31: Reconciliation on Half-Year Basis
RECONCILIATION ON HALF-YEAR BASIS IFRS to adjusted / underlying net profit CHF m H2 2014 H1 2015 H2 2015 Change Change H2 15/H2 14 H2 15/H1 15 Profit after tax per consolidated Financial Statements (IFRS) 188.5 39.7 82.8 -56% +108% Amortisation of intangible assets related to the UBS transaction 37.
Slide 32: Strong Capital Base
STRONG CAPITAL BASE Impacted partly by the US provision CHF m 31.12.2014 31.12.2015 Change Basel III Basel III Equity at the beginning of the year 5,039 5,338 +6% Julius Baer Group Ltd. dividend -133 -224 +68% Net profit (IFRS) 367 123 -67% Capital increase 79 - -100% Change in treasury shares -9 -4
Slide 33: Balance Sheet – Financial Investments AFS
BALANCE SHEET – FINANCIAL INVESTMENTS AFS CHF m 31.12.2013 31.12.2014 31.12.2015 in Change vs. % 31.12.2014 Money market instruments 2,494 2,312 2,298 14% -1% Debt instruments 10,549 12,204 14,177 86% +16% Government and agency bonds 2,060 1,571 3,560 21% +127% Financial institution bonds 5,293 7,05
Slide 34: Breakdown of AuM
BREAKDOWN OF AUM Asset mix 31.12.2013 31.12.2014 31.12.2015 Equities 27% 26% 27% Bonds (including Convertible Bonds) 20% 19% 19% 1 Investment Funds 22% 24% 23% Money Market Instruments 5% 4% 4% Client Deposits 20% 21% 21% Structured Products 5% 5% 5% 2 Other 1% 1% 1% Total 100% 100% 100% Currency mi
Slide 35: Julius Baer: Pure-Play Private Banking Group
JULIUS BAER: PURE-PLAY PRIVATE BANKING GROUP Well positioned for further growth • Rich heritage – celebrated 125 years in 2015 BASLE ST. GALLEN ZURICH ZUG • Premium brand in global wealth DUBLIN KIEL HAMBURG BERNE LUCERNE management AMSTERDAM LONDON LUXEMBOURG DUESSELDORF FRANKFURT WÜRZBURG LAUSANNE