Monday 23, July 2018 by Bloomberg

Julius Baer declines most in six months as new money disappoints


Until Monday, the stock had been little changed this year.

Julius Baer Group Ltd. dropped the most in almost six months after increases in assets under management and net new money at the Swiss wealth manager failed to convince investors that CEO Bernhard Hodler’s growth plans are on track.

The Zurich-based bank’s stock fell as much as 4.8 per cent—the biggest decline since February—and was trading 4.4 per cent lower as of 9:45 a.m. local time, giving the bank a market value of about CHF 12.2 billion ($12.3 billion). Until Monday, the stock had been little changed this year.

While the firm had enjoyed stellar growth through high-profile acquisitions and a hiring spree under Hodler’s predecessor, Boris Collardi, analysts are questioning whether it can sustain similar growth rates as markets become more volatile. The Bank has been grappling with cost and margin pressures and Hodler on Monday also cautioned on future market conditions because of the potential impact of trade tensions and the end of quantitative easing.

Julius Baer “witnessed a slowdown in the net new asset growth pace from 6.6 per cent in 2017 to 5.1 per cent in the first half,” Baader Helvea AG analyst Tomasz Grzelak wrote in a note to investors. “In our view, normalised growth makes the shares look fairly valued.”

Assets under management at the bank rose three per cent to CHF 400 billion from the end of 2017, below analyst estimates, according to UBS Group AG. All regions recorded net inflows, with strong contributions from clients in Europe, Switzerland and Asia. That was slightly offset by deleveraging by clients in Asia and the Middle East, reflecting a more cautious positioning of their portfolios as the US increased interest rates.

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