JB, EFG structured product activity on downward trend

Julius Baer saw AuM increase four percent to CHF441 billion (US$510.7 billion) as of 30 June year-on-year (YoY).

The growth was driven by ‘net positive developments in global equity and bond markets and net new money inflows, partly offset by a net negative currency impact resulting largely from the strengthening of the Swiss franc against the US dollar and the euro’, according to the bank’s H1 2023 earnings report.

In H1 2023, FX, precious metals and structured products-related income fell following a drop in volatility and muted client activity

Structured products accounted for five percent of the AuM, or CHF22.1 billion, after equities (31%), investment funds (29%), bonds (15%), client deposits (15%). The proportion is one percent higher than six months and a year ago.

With CHF74 billion assets under custody, total client assets reached CHF515 billion as of 30 June, stated the bank led by headed by Philipp Rickenbacher (pictured). 

After a slow start of the year, net new money accelerated in Q2 2023, reaching CHF7.7 billion during the six months. This represents a recovery from the prior-year period when an outflow of CHF1.1 billion, or a 28% decrease from H2 2022, was recorded.

In H1 2023, foreign exchange (FX), precious metals and structured products-related income fell following a drop in volatility and muted client activity. The decline was offset by an increase in treasury swap income benefiting from ‘significant year-on-year increase in the differential between US dollar and Swiss franc interest rates’.

Accordingly, the net income from financial instruments at fair value through profit or loss rose 26% to CHF596m YoY, or a three percent increase from H2 2022.

At the same time, net commission or fee income fell eight percent to CHF963m while Net interest income climbed 36% to CHF464m. That adds to CHF2.0 billion operating income, up nine percent YoY.

Operating expenses were up five percent to CHF1.4 billion. As a result, adjusted net profit came to CHF541m, up 14% YoY. 

EFG International

EFG International, on the other hand, reported a 6.9% drop in AuM to CHF146.5 billion from a year ago mainly due to the divestment of Asesores y Gestores Financieros S.A. and market movements, according to the private bank’s H1 2023 earnings report.

The decrease had a negative impact on net banking fee and commission income.

Compared with six months ago, the AuM increased 2.3% to CHF146.5 billion, driven by positive market performance and net asset inflows, partially offset by foreign exchange impacts.

‘After a subdued start to the year, we saw strong business development momentum in the second quarter of 2023 with net inflows of CHF3.0 billion,’ stated the report.

Additionally, the bank owned CHF27.3 billion assets under administration (AuA), which are trust assets, and CHF6.8 billion assets under custody as of 30 June.

Structured notes accounted for 2.7% of the combined AuM and AuA, or CHF4.7 billion, which was down 6.9% YoY, but up 12.4% compared to the previous six-month period.

Total derivatives assets were down 39.8% to CHF1.2 billion while derivatives liabilities were down 45.2% to CHF1.0 billion from a year ago.

In H1 2023, the Swiss bank posted CHF 724.8m operating income, up 20.0% YoY, and CHF527.7m operating expenses, up 10.6%. As a result, its International IFRS net profit increased 47.2% to CHF100.3m – a record level, according to EFG International.

Net new assets came to CHF3.0 billion, higher than CHF2.5 billion and CHF1.7 billion seen in H2 22 and H1 22, respectively. That corresponds to 4.2% net new assets annualised growth rate.  

The bank noted the profitability is partly attributed to a ’strong hiring momentum’ as 75 hires of client relationship offers onboarded across regions during the six months.

Earlier this month, EFG International announced a reshuffle of its management structure in Asia Pacific (Apac) with the appointment of new market group heads.

Click the links to read the H1 2023 earnings reports of Julius Baer and EFG International.