(Bloomberg) -- Julius Baer Group Ltd. said that 2024 profit should be “significantly” above last year’s level, with the bank planning to resume payouts to investors in 2025 following a regulator review of the losses linked to the Benko real estate collapse.
Client inflows accelerated in the four months through October to net 7.5 billion Swiss francs ($8.5 billion), the Zurich-based bank said Thursday. Assets under management grew 12% in the first ten months to 480 billion Swiss francs, helped by inflows and market gains.
An improvement in the profit outlook over last year, when Baer was ensnared by the collapse of Benko’s Signa property empire, will aid incoming chief executive officer Stefan Bollinger, who is now due to take over on Jan. 9. Baer has been without a permanent CEO since Philipp Rickenbacher stepped down in January over the affair.
Chief Financial Officer Evie Kostakis said on a call that the bank’s base case was to resume payouts to investors next year, though the board of directors would wait until an investigation by Swiss financial regulator Finma into the loans to Benko’s Signa companies was complete. She didn’t give an estimate of when that would be.
The distribution would ultimately be based on the final implementation of the Basel III regulations, she said. The lender ran up an exposure to Signa, essentially a single client, of some $700 million. Losses on the loans cut 2023 profit in half.
Private Debt
Baer has said that they expect the wind-down of the private debt business at the heart of the Signa collapse to largely be completed by 2026. That portfolio declined further to about 400 million francs at the end of October from around 800 million francs at the end of 2023.
The bank signaled that client flows for the final two months of the year could be impacted by one large client transaction of around 900 million Swiss francs.
Overall, inflows mainly came from clients based in the UK, Germany, Singapore, India and the UAE, Baer said.
The contribution of net interest income to the bank’s gross margin dipped in the period, to 7 basis points, while the number of relationship managers increased by 46 to 1,389.
“The net interest income performance may provide an initial source of disappointment for investors,” Thomas Hallett, an analyst at KBW. “However, the pick-up in flows and strong hiring rates are positives.”
--With assistance from Macarena Muñoz.
(Updates with further details throughout)
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