Julius Baer reports CHF19.4bn in structured products AuM

Julius Baer has reported an adjusted net-profit of CHF636m (US$694m) for H1 2021, the highest half-year profit in the company’s history (H1 2020: CHF524m).

Assets under management (AuM) increased 12% to CHF486 billion, driven by market performance, currency impact and net new money inflows. Structured products made up four percent of the total AuM, or CHF19.4 billion.

As of 30 June 2021, liabilities on the groups balance sheet included CHF14.8 billion structured products issued (end-December: CHF13.2 billion).

The Swiss private banking group, led by Philipp Rickenbacher (pictured), chief executive officer, is an active structured products provider.

In the first half of 2021, it launched 346 publicly offered structured products in Switzerland. The structures, which were worth an estimated CHF45m (US$50.2m), were all reverse convertibles and included products with additional features such as callable option (191 products), knockout option (29), and worst of option (147).

Almost all new issues were linked to equities, with single stocks the preferred underlying – seen in 198 products – while a further 88 products were tied to a basket of shares. Some 286 individual shares were used during the quarter, with pharmaceuticals (58), companies from the technology sector and banks (29 each) and industrials (22) especially popular.

Structures linked to a basket of indices were also in demand (59). They all featured the local Swiss Market Index (SMI), with many also adding the S&P 500 (56), and Eurostoxx 50 (42).

Coupons ranged from four 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 1H 2021 was 8.70% while the average barrier stood at -34.08%.

One hundred and forty-seven products issued in the first half of 2021 were denominated in Swiss francs, 122 in US dollars and the remaining 77 products were issued in euros.

Some 548 publicly offered products matured during half-year 2021. Of these, 543 were reverse convertibles, including 161 that were linked to a worst-of basket. The SMI and Eurostoxx 50 were seen frequently among the maturities (61 and 58 products, respectively), as were the shares of Roche, Nestle and Novartis.

Net commission and fee income rose by 12% to CHF1.2 billion. This increase was driven mainly by a 19% improvement in advisory and management fees on the back of the growth in client assets and higher-value mandate penetration. Brokerage commissions went up by seven percent following continued healthy client transaction activity, particularly in the first quarter of 2021.

On June 30 2021, financial liabilities at amortised costs on the group’s balance sheet included CHF2.4 billion of debt issued (end-December: CHF1.5 billion). Debt issued comprised of bonds (CHF2.2 billion) and money market instruments (CHF208m).

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