Julius Baer Gruppe AG · SIX:BAER
Julius Baer Gruppe — Julius Baer Group — FY2014 Earnings Presentation
38 slides from Julius Baer Gruppe's earnings presentation, Feb 2, 2015
Slide 1: FY 2014 Results and Business Update
FY 2014 RESULTS AND BUSINESS UPDATE Presentation for Investors, Analysts & Media Zurich, 2 February 2015
Slide 2: Content
CONTENT Introduction Boris F.J. Collardi, CEO Financial Results FY 2014 Dieter A. Enkelmann, CFO Update on Swiss Franc Appreciation Impact Dieter A. Enkelmann, CFO Business Update Boris F.J. Collardi, CEO Q&A Appendix 2
Slide 3: Major profit growth through IWM synergies
MAJOR PROFIT GROWTH THROUGH IWM1 SYNERGIES Julius Baer ready to confront 2015 Swiss franc appreciation headwind • AuM increased by 14% to CHF 291bn, a new record 22% increase in • Continued strong net new money: CHF 13bn (5%) adjusted net • 2014 IWM-related rightsizing targets reached profit2 to CHF
Slide 4: Content
CONTENT Introduction Boris F.J. Collardi, CEO Financial Results FY 2014 Dieter A. Enkelmann, CFO Update on Swiss Franc Appreciation Impact Dieter A. Enkelmann, CFO Business Update Boris F.J. Collardi, CEO Q&A Appendix 4
Slide 5: Scope of presentation of financials
SCOPE OF PRESENTATION OF FINANCIALS Financial results are presented as usual on the adjusted basis • Excluding integration and restructuring expenses and the amortisation of intangible assets related to previous acquisitions or divestitures as well as, in 2013, a provision in relation to the withhol
Slide 6: Positive performance in most investment classes
POSITIVE PERFORMANCE IN MOST INVESTMENT CLASSES FX volatility started to increase again in H2 Comparison of development of World Stock Index, World Bond Index and Gold Price, Indexed1 120 FTSE All-World Index 2 110 Citigroup World Government Bond Index 2 100 Gold Spot price ($)2 90 01.01.14 31.03.14
Slide 7: AuM growth of CHF +36bn (+14%) to CHF 291bn
AUM GROWTH OF CHF +36bn (+14%) TO CHF 291bn Incl. CHF 60bn1 from IWM Development of Assets under Management • AuM CHF 291bn, +14% vs. year-end 2013 CHF bn – Net new money CHF +12.7bn 11.4 290.6 – Acquisitions CHF +6.3bn 5.8 6.3 12.7 – Market performance CHF +5.8bn 254.4 – Currency impact CHF +11.4bn
Slide 8: Net new money 5% - well within target range
NET NEW MONEY 5% - WELL WITHIN TARGET RANGE Despite ongoing tax-regularisation driven impacts on European cross-border flows Net New Money in CHF bn and %1 • NNM of CHF 12.7bn or 5.0%1 6% 5% 4% 4% 6% 4% 7.5 • Continued inflows from all growth markets as well as from local businesses in 5.5 5.2 Germa
Slide 9: Operating income +16% to CHF 2.5bn
OPERATING INCOME +16% TO CHF 2.5bn Average AuM +19% Net commission/fee income +19% to CHF 1,518m CHF m vs. FY 13 • In line with increase in average AuM 2,547 +16% Net interest/dividend income +17% to CHF 648m 53 +4% 2,195 • Excluding dividend income on trading 51 328 +4% portfolios1, underlying NII
Slide 10: Gross margin
GROSS MARGIN1,2 IWM extrapolated gross margin exceeding 2015 target level 2012 2013 2014 • Net commission/fee income 56bps 96bps 96bps 94bps (same vs. 2013; H2 2014 -2bps vs. H1) 102 98 94 95 91 93 • Net interest income2 21bps 2 1 2 2 2 (-1bp vs. 2013; H2 2014 -1bps vs. H1) 1 2 2 16 15 13 21 3 15 11
Slide 11: Operating expenses +14% to CHF 1.8bn
OPERATING EXPENSES1 +14% TO CHF 1.8bn Below the increase in average AuM – Reflecting IWM synergies coming through Personnel expenses +20% to CHF 1,182m CHF m vs. FY 13 • Monthly avg #FTEs +17% due to timing of IWM-related net reductions 1,840 +14% during the year, as well as first-time 1,611 85 -7%
Slide 12: Adjusted net profit FY 2014: CHF 586m
ADJUSTED NET PROFIT FY 2014: CHF 586m Increase of 22% vs. 2013 result CHF m 2012 2013 2014 Change 2014/2013 Operating income 1,737 2,195 2,547 +16% Net interest and dividend income 559 552 648 +17% Net commission and fee income 980 1,277 1,518 +19% Net trading income 173 315 328 +4% Other ordinary r
Slide 13: IFRS profit up by 96% to CHF 367m
IFRS PROFIT UP BY 96% TO CHF 367m Reconciliation consolidated financial statement (IFRS) to adjusted net profit CHF m 2012 2013 2014 Change 2014/2013 Profit after tax per consolidated Financial Statements (IFRS) 268.5 187.8 367.4 +96% Amortisation of intangible assets related to the UBS transaction
Slide 14: Solid balance sheet – low risk profile
SOLID BALANCE SHEET – LOW RISK PROFILE Loan-deposit ratio 0.54 CHF bn CHF 82.2bn Liabilities (CHF 72.5bn) Assets & Equity Due to banks Due from banks 8.9 (11.5) 5.2 (8.0) (Incl. open trading volumes and group (Open trading positions; repo) Loan- debt) deposit ratio 0.54 Loans (0.53) (Incl. lombard l
Slide 15: 23.4% BIS total capital ratio
23.4% BIS TOTAL CAPITAL RATIO Capital targets: total capital ratio > 15%; tier 1 ratio > 12% 31.12.2013 31.12.2014 31.12.2013 31.12.2014 BIS approach / CHF m Basel III 3 Basel III 3 Basel III Basel III fully applied fully applied Total risk-weighted positions 15,908 16,978 16,223 17,205 1 CET1 capit
Slide 16: Content
CONTENT Introduction Boris F.J. Collardi, CEO Financial Results FY 2014 Dieter A. Enkelmann, CFO Update on Swiss Franc Appreciation Impact Dieter A. Enkelmann, CFO Business Update Boris F.J. Collardi, CEO Q&A Appendix 16
Slide 17: Stronger CHF provides headwind
STRONGER CHF PROVIDES HEADWIND Applying current exchange rates to end-2014 AuM: 9% lower AuM ‘starting point’ Julius Baer currency exposure1 Pre-IWM Incl. IWM • AuM: 13% denominated in CHF 30 June 2012 31 December 2014 • Adjusted expenses: 60% in CHF 1% 2% 4% 6% 14% 8% 13% 47% net mismatch 2% 1% 2
Slide 18: Mitigating actions required
MITIGATING ACTIONS REQUIRED Reconfirming <70% CIR target1 – subject to no further major adverse market impacts Costs: initiated savings measures of ~CHF 100m p.a.2, of which ~CHF 60m2 effective in 2015 • Decreasing personnel expenses2 via – controlled hiring – resource reallocation – additional righ
Slide 19: Content
CONTENT Introduction Boris F.J. Collardi, CEO Financial Results FY 2014 Dieter A. Enkelmann, CFO Update on Swiss Franc Appreciation Impact Dieter A. Enkelmann, CFO Business Update Boris F.J. Collardi, CEO Q&A Appendix 19
Slide 20: IWM largely completed - strengthening Group
IWM LARGELY COMPLETED - STRENGTHENING GROUP Productivity exceeding our expectations Transfer and • 17 locations have been transferred integration • Only India business to follow in 2015 – process well on track essentially completed • AuM target within reach (at 2014 year-end market value: CHF 60bn)
Slide 21: Renewal of IT platform globally
RENEWAL OF IT PLATFORM GLOBALLY Launched in Asia first • Improved client experience, operating efficiency and flexibility … Goal • … through renewal of IT platform globally • Selected Temenos to initiate planning of core banking platform Modular approach – renewal Retaining flexibility • Retaining f
Slide 22: Building on our strengths
BUILDING ON OUR STRENGTHS Investments in client service and operating efficiency will deliver shareholder value • Strong heritage – celebrating 125 years in 2015 • Group delivered greatly improved results in 2014 Starting from • IWM transaction benefits being realised strong position • Julius Baer h
Slide 23: Confirming medium-term targets
CONFIRMING MEDIUM-TERM TARGETS Including for 2015, assuming no further short-term market dislocations Current Medium-Term Targets (FY 2014) Cost/Income 70% 65-70% Ratio1 Pre-Tax Profit 26bps 30-35bps Margin2 Net New 5% 4-6% Money3 1 Adjusted cost/income ratio, calculated excluding valuation allowanc
Slide 24: Julius Bar
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Slide 25: Content
CONTENT Introduction Boris F.J. Collardi, CEO Financial Results FY 2014 Dieter A. Enkelmann, CFO Update on Swiss Franc Appreciation Impact Dieter A. Enkelmann, CFO Business Update Boris F.J. Collardi, CEO Q&A Appendix 25
Slide 26: Adjusted net profit CHF 586m
ADJUSTED* NET PROFIT CHF 586m CHF m 2012 2013 2014 Change 2014 2014/2013 in % 1 Net interest and dividend income 559 552 648 +17% 25% Net commission and fee income 980 1,277 1,518 +19% 60% 1 Net trading income 173 315 328 +4% 13% Other ordinary results 26 51 53 +4% 2% Operating income 1,737 2,195 2,
Slide 27: Adjusted consolidated income statement
ADJUSTED* CONSOLIDATED INCOME STATEMENT Half-yearly CHF m H2 2013 H1 2014 H2 2014 Change Change H2 2014 H2 14/H2 13 H2 14/H1 14 in % 1 Net interest and dividend income 277 347 301 +9% -13% 23% Net commission and fee income 678 746 772 +14% +4% 59% 1 Net trading income 130 115 212 +63% +85% 16% Other
Slide 28: Reconciliation on half-year basis
RECONCILIATION ON HALF-YEAR BASIS IFRS to adjusted/underlying net profit CHF m H1 2013 H2 2013 H1 2014 H2 2014 Change Change H2 14/H2 13 H2 14/H1 14 Profit after tax per consolidated Financial Statements (IFRS) 114.3 73.5 178.9 188.5 +156% +5% Amortisation of intangible assets related to the UBS tra
Slide 29: Strong capital base
STRONG CAPITAL BASE CHF m 31.12.2013 31.12.2014 Change Basel III Basel III Equity at the beginning of the year 4,698 5,039 +7% Julius Baer Group Ltd. dividend -130 -133 +2% Net profit (IFRS) 188 367 +95% Capital increase 211 79 -62% Change in treasury shares -42 -9 -78% Treasury shares and own equit
Slide 30: RWA and capital: additional details
RWA AND CAPITAL: ADDITIONAL DETAILS Capital targets: total capital ratio > 15%; tier 1 ratio > 12% 31.12.2013 31.12.2014 Absolute 31.12.2013 30.06.2014 31.12.2014 Basel III Basel III Change Absolute BIS approach / CHF m 3 3 3 fully applied fully applied Basel III Basel III Basel III vs. 31.12.2013 C
Slide 31: Balance sheet – financial investments AFS
BALANCE SHEET – FINANCIAL INVESTMENTS AFS CHF m 31.12.2012 31.12.2013 31.12.2014 in Change vs. % 31.12.2013 Money market instruments 635 2,494 2,312 16% -7% Debt instruments 11,051 10,549 12,204 84% +16% Government and agency bonds 1,775 2,060 1,571 11% -24% Financial institution bonds 5,203 5,293 7
Slide 32: Breakdown of AuM
BREAKDOWN OF AUM Asset mix 31.12.2012 31.12.2013 31.12.2014 Equities 25% 27% 26% Bonds (including Convertible Bonds) 23% 20% 19% 1 Investment Funds 20% 22% 24% Money Market Instruments 7% 5% 4% Client Deposits 18% 20% 21% Structured Products 5% 5% 5% 2 Other 2% 1% 1% Total 100% 100% 100% Currency mi
Slide 33: IWM: AuM development
IWM: AUM DEVELOPMENT Only India left to be transferred IWM AuM based on value at applicable transfer dates* Applicable local closings of the CHF bn transaction in 2013: 24.3 52.8 54.5 53.8 • Feb: Merrill Lynch Bank Switzerland 2.4 • April: Uruguay1, Chile1, Luxembourg1, 13.3 9.9 Monaco1 • May: Hong
Slide 34: IWM: on track to meet or exceed targets
IWM: ON TRACK TO MEET OR EXCEED TARGETS Productivity improvements ahead of plan – 2014 rightsizing targets fully realised IWM - Estimated productivity1 IWM on Julius Baer platform Actual Target 2 2014 2015 • Significant progress in productivity Gross margin (extrapolated) ~86bps ~85bps Adjusted cost
Slide 35: IWM: transaction, restructuring and integration costs
IWM: TRANSACTION, RESTRUCTURING AND INTEGRATION COSTS Update and estimated breakdown over time Pre-tax, CHF m ~435 51 Transaction ~25% costs ~25% IT costs 193 ~35% (incl. on- ~35% boarding) ~30% 109 Incentives ~30% ~10% ~70 Others ~10% ~12 Total 2012 2013 2014 2015 2016 and beyond 35
Slide 36: Julius Baer attractive for top professionals
JULIUS BAER ATTRACTIVE FOR TOP PROFESSIONALS Appeal of independence and pure private banking Attractive platform for top private banking Number of Relationship Managers (RMs) talents: 391 7 -49 • Independence/pure private banking 1,155 85 43 11 • Client-centric approach 667 • Wide range of first-cla
Slide 37: Julius Baer: pure-play private banking group
JULIUS BAER: PURE-PLAY PRIVATE BANKING GROUP Well positioned for further growth Europe Switzerland • Rich heritage – celebrating KREUZLINGEN BASEL ZURICH ST. GALLEN 125 years in 2015 ZUG DUBLIN LUCERNE • Premium brand in global wealth AMSTERDAM KIEL HAMBURG BERNE management LONDON ST. MORITZ LAUSANN
Slide 38: Cautionary statement on forward-looking information
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION General which these forward-looking statements are based, except as required by This presentation by Julius Baer Group Ltd. (“the company”) does not constitute applicable law or regulation. an invitation or offer to acquire, purchase or subscribe f