Julius Baer shares dip on lower profit guidance

Zurich — Swiss bank Julius Baer & Co on Monday dampened profit expectations after it booked a valuation adjustments of Sf82m ($92.6m).

The bank said that of the Sf82m, Sf70m was booked against the group’s credit portfolio after October 31.

“The overall quality of the loan book and the balance sheet remains unaffected, with a consistently strong capitalisation and high liquidity providing ample capacity to absorb any risks resulting from the group’s business,” Julius Baer said in an interim update for the first 10 months of 2023.

“Mainly as a consequence of the rise in credit provisions and ... increase in the effective tax rate, the group now does not expect the full-year 2023 net profit level to match the one achieved in 2022.”

The bank’s shares fell 8.6% in early morning trade.

Business Insider reported that Baer lent hundreds of millions of francs to the struggling Signa Group, founded by property tycoon Rene Benko. A Baer spokesperson declined to comment on the matter.

“Whilst [the] credit hit looks manageable, risk management questions seem inevitable,” Jefferies analysts said.

“Investors may well question how — if indeed it is confirmed to be the case — a single client has resulted in such a substantial credit provision being taken and whether there could be other outsized single client exposures.”

Vontobel analyst Andreas Venditti said estimates for the full-year would have to be lowered after the “worse-than-expected” results.

The bank said it recorded net new money inflows of Sf10.3bn for the first 10 months of the year.

Analysts at Zuercher Kantonalbank had expected Sf15bn, with Baer already reporting inflows of Sf7bn for the first half of 2023.

Assets under management rose 3% to Sf435bn during the period, driven mainly by inflows and the strength of the global equity market.

Reuters