Julius Baer: record profit, structured products AuM falls

Julius Baer has reported a 55% growth in net-profit to CHF1.1 billion (US$1.2 billion) for 2021, surpassing the CHF1 billion mark for the first time in the company’s history (FY 2020: CHF699m).

Assets under management (AuM) rose to CHF482 billion, up by CHF 48 billion or 11%. This increase was driven by significant positive market performance and bolstered by strong net new money inflows. Structured products made up four percent of the total AuM, or CHF19.3 billion (2020: CHF21.7 billion).

As of 31 December 2021, liabilities on the groups balance sheet included CHF14.5 billion structured products issued (end-December 2020: CHF13.2 billion).

The Swiss private banking group, led by Philipp Rickenbacher (pictured), chief executive officer, issued 1,092 publicly offered structured products in its domestic market in 2021, according to SRP data (2020: 1,261).

The structures, which were issued on the paper of the bank’s Guernsey branch, were all reverse convertibles and included products with additional features such as callable option (565 products), knockout option (110), and worst of option (465). They were listed on the Six Swiss Exchange in the trading segment for structured products.

Almost all new issues were linked to equities, with 630 products linked to single stocks and a further 265 products tied to a basket of shares. Some 317 individual shares were used during the year, with financials (168 products), companies from the technology sector (165) and health care (162) especially in demand.

The most popular individual share was that of Apple (30 products), followed by Netflix (23) and Amazon (22).

Structures linked to a basket of indices, at 191 products in total, saw their market share increase by seven percent compared to the previous year. They almost all featured the S&P 500 (182 products), with many also adding the local Swiss Market Index (169), and Eurostoxx 50 (156).

Products on single indices were down to just three (2020: 31); two products were linked to ETFs; and one product came from the real estate asset class.

Coupons ranged from three percent to 34.55% per annum, with the latter seen in a callable barrier reverse convertible (BRC) on the shares of Apple, Tesla and United Health, which had an American barrier of -45%. The product was called on 24 June 2021, four months after its initial launch.

The average coupon for the bank’s products in 2021 was 8.40% (2020: 8.42%) while the average barrier for capital protection stood at 66.74% (64.65%).

Some 463 products issued in 2021 were denominated in Swiss francs; 388 in US dollars; 238 in euros; and the remaining three in sterling.

Net commission and fee income grew by 14% to CHF2.3 billion, driven mainly by significantly higher advisory and management fees, which went up by 22% to CHF1.6 billion, well above the 15% rise in monthly average AuM.

Brokerage commissions grew at a lower rate of three percent to CHF839m as client activity slowed down after a very strong first quarter of 2021.

Net new money improved by 30% to CHF20 billion, growing at a rate of 4.5% over the year. All regions saw positive net inflows, with particularly strong contributions from clients domiciled in Western Europe (especially the UK, Ireland, Germany, Switzerland and Luxembourg), the UAE, Brazil and Asia (especially Singapore, Japan and India).

In Asia the bank saw Roger Meier, its head of structured products advisory & solutions for the region, depart. 

Click the link to read the Julius Baer full year 2021 results, presentation, sustainability report and business review.