Julius Baer Gruppe AG · SIX:BAER
Julius Baer Gruppe — Julius Baer Group — H1 2016 Earnings Presentation
34 slides from Julius Baer Gruppe's earnings presentation, Jul 25, 2016
Slide 1: HY 2016 Results and Business Update
HY 2016 RESULTS AND BUSINESS UPDATE Presentation for Investors, Analysts & Media Zurich, 25 July 2016
Slide 2: Content: Introduction
CONTENT Introduction Boris F.J. Collardi, CEO 2
Slide 3: Promising Start to a Year of Investments
PROMISING START TO A YEAR OF INVESTMENTS Validation of our focused business model – Significant hiring initiative • Assets under management up 4% to record CHF 311 billion Encouraging • Net new money close to 4% – accelerated after slow start to period AuM and margin • Gross margin 95 bps – down fro
Slide 4: Content: Financial Results HY 2016
CONTENT Financial Results HY 2016 Dieter A. Enkelmann, CFO 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 amortisation of intangible assets related to previous acquisitions or divestments, as well as taxes on those respective items • In order to ensure
Slide 6: H1: Stock Markets Volatile, Falling Bond Yields
H1: STOCK MARKETS VOLATILE, FALLING BOND YIELDS Many clients maintained cautious stance, although FX volumes improved vs. H2 2015 Index Development of FTSE ALL-WORLD INDEX, rebased1,2 • H1 was characterised by slightly rising 105 Oil hits $27 equity markets 100 • However, subject to periods of signi
Slide 7: AuM Increase of CHF 12bn (+4%) to CHF 311bn
AUM INCREASE OF CHF 12bn (+4%) TO CHF 311bn Driven by continued net inflows and first-time consolidation of Kairos Development of Assets under Management CHF bn +8.6 +1.6 -4.0 • AuM CHF 311bn, +4% vs. year-end 2015 +5.5 311.4 299.7 – Net new money CHF +5.5bn 284.0 – Acquisitions (Kairos) CHF +8.6bn
Slide 8: Net New Money 3.7% – Close to Target Range
NET NEW MONEY 3.7% – CLOSE TO TARGET RANGE Inflows accelerated after slow start to year Net New Money in CHF bn and %1 • NNM: CHF 5.5bn (3.7% annualised) 3.6% 3.8% 5.9% 3.8% 4.5% 3.9% 3.7% • Continued inflows from Asia, Middle 7.5 East, CEE, local businesses in 6.5 Switzerland, Germany and Italy, an
Slide 9: Operating Income +1% to CHF 1.4bn
OPERATING INCOME +1% TO CHF 1.4bn Supported by higher net interest income and Kairos fair value adjustment Compared to H1 2015: vs. H1 vs. H2 CHF m Net commission/fee income -7% to CHF 739m 2015 2015 • Mainly on lower brokerage commissions following +1% +11% lower client risk appetite 1,408 1,425 15
Slide 10: Gross Margin -4bps to 95bps, Improved from H2 2015
GROSS MARGIN1 -4bps TO 95bps, IMPROVED FROM H2 2015 Excluding Kairos fair value adjustment: 92bps 2014 2015 2016 94bps 94bps 95bps 99 95 93 95 88 • Net commission/fee income 49bps 1 1 (-7bps vs. H1 2015; -1bp vs. H2 2015) 2 2 2 4 14 24 1 15 16 20 20 • Net interest income2 22bps 16 (+4bps vs. H1 2015
Slide 11: Operating Expenses -27% to CHF 0.9bn
OPERATING EXPENSES1 -27% TO CHF 0.9bn Excl. H1 2015 US provision: -1%, helped by CHF 63m positive pension fund impact Compared to H1 2015: vs. H1 vs. H2 CHF m 2015 2015 Personnel expenses -1% to CHF 623m 1,280 • Helped by +CHF 63m impact following 1,106 -27% -15% pension fund plan amendment in Switz
Slide 12: Adjusted Net Profit H1 2016 Up 270% to CHF 402m
ADJUSTED NET PROFIT H1 2016 UP 270% TO CHF 402m Excluding H1 2015 US provision: +5% to CHF 402m CHF m H1 2015 H2 2015 H1 2016 Change Change H1 16/H1 15 H1 16/H2 15 Operating income 1,408 1,286 1,425 +1% +11% Adjusted operating expenses 1,280 1,106 940 -27% -15% Adjusted profit before taxes 128 181 4
Slide 13: Solid Balance Sheet – Low Risk Profile
SOLID BALANCE SHEET – LOW RISK PROFILE High liquidity – Loan to deposit ratio 0.57 CHF bn Liabilities Assets CHF 87.8bn & Equity (CHF 84.1bn)* Due from banks 8.2 (6.9) 6.9 (4.7) Due to banks Loan-to- deposit ratio 0.57 (0.56) Loans (incl. lombard lending and 36.7 (36.4) mortgages to private clients)
Slide 14: 17.3% BIS Total Capital Ratio
17.3% BIS TOTAL CAPITAL RATIO Significantly above regulatory requirements 30.06.2015 31.12.2015 30.06.2016 30.06.2015 31.12.2015 30.06.2016 BIS approach / CHF m Basel III 3 Basel III 3 Basel III 3 Basel III Basel III Basel III phase-in phase-in phase-in fully applied fully applied fully applied Risk
Slide 15: 2016 Guidance and Medium-Term Targets
2016 GUIDANCE AND MEDIUM-TERM TARGETS FY cost/income ratio1,2 currently expected at 68-69% (vs. 64.7% in H1 2016) H1 2016 Current guidance for Medium-term (adjusted results1) FY 20165 targets (adjusted results1) (adjusted results1) Cost/income 64.7% 68-69% 64-68% Ratio1,2 Pre-tax profit 32bps >30bps
Slide 16: Content: Business Update
CONTENT Business Update Boris F.J. Collardi, CEO 16
Slide 17: Preparing Julius Baer for the Future
PREPARING JULIUS BAER FOR THE FUTURE In a continuously challenging market environment • Q1: Deteriorating fundamentals, aggravated by lower oil prices Challenging • Q2: Initial improvement – until Brexit vote and Italian banking problems market • Market uncertainty leading to continued low client ac
Slide 18: Organisation and Leadership
ORGANISATION AND LEADERSHIP Realigned for the next phase of growth1 Emerging Latin 2 Switzerland Europe Markets America Asia Pacific G. Rossi Y. Robert-Charrue R. Bersier G. Raitzin J. Lee L a Thailand o s Clients • Home Market • Taking • Second pillar • Focus on • Second home with solid advantage o
Slide 19: Taking Advantage of Hiring Opportunities
TAKING ADVANTAGE OF HIRING OPPORTUNITIES Confirming position as employer of choice with >200 new RMs (gross) joining in 2016 Relationship Managers (# of RMs) Accelerated organic growth initiative • Successfully closed IWM transaction +107% • Julius Baer brand attractive for RMs/clients 674 1’284 • S
Slide 20: Julius Baer - Your Wealth
JULIUS BAER - YOUR WEALTH ‘What matters to you?’ WEALTH PLANNING WEALTH MANAGEMENT WEALTH FINANCING ADVICE ADVICE ADVICE DISCRETIONARY BASIC PREMIUM ADVANCED MANDATES Advice for independent Personal advice and Dedicated investment Full delegation and investors systematic portfolio advisor and tailor
Slide 21: Technology Transformation
TECHNOLOGY TRANSFORMATION Multi-year project to improve client/RM experience and operating efficiency Major benefits: modern, efficient and scalable system for clients, RMs and the bank • Platform: harmonised process, implementation in Asia planned for H1 2017 and building on the recent successful i
Slide 22: Proven and Dynamic Business Strategy
PROVEN AND DYNAMIC BUSINESS STRATEGY Continue to manage the Group for sustainable growth and profitability Pure private banking • Proven business model – also when sector/markets in turmoil • Trusted brand to attract new clients based on holistic, unconflicted service model private banking talen
Slide 23: Julius Bar
Julius Bar
Slide 24: Content: Appendix
CONTENT Appendix Julius Bar 24
Slide 25: Adjusted Financial Performance
ADJUSTED* FINANCIAL PERFORMANCE Half-yearly CHF m H1 2015 H2 2015 H1 2016 Change Change H1 2016 H1 16/H1 15 H1 16/H2 15 in % Net interest and dividend income 1 384 327 510 +33% +56% 36% Net commission and fee income 792 730 739 -7% +1% 52% 1 Net trading income 217 219 118 -46% -46% 8% Other ordinary
Slide 26: Adjusted (Excl. 2015 US Provision) Financial Performance
ADJUSTED* (EXCL. 2015 US PROVISION) FINANCIAL PERFORMANCE Half-yearly CHF m H1 2015 H2 2015 H1 2016 Change Change H1 2016 H1 16/H1 15 H1 16/H2 15 in % Net interest and dividend income 1 384 327 510 +33% +56% 36% Net commission and fee income 792 730 739 -7% +1% 52% 1 Net trading income 217 219 118 -
Slide 27: Reconciliation on Half-Year Basis
RECONCILIATION ON HALF-YEAR BASIS IFRS to adjusted net profit and (2015) underlying net profit for the Group CHF m H1 2015 H2 2015 H1 2016 Change Change H1 16/H1 15 H1 16/H2 15 Profit after tax for the Group per consolidated Financial Statements (IFRS) 1 39.7 82.8 362.1 +812% +337% Amortisation of i
Slide 28: IWM: Integration Costs
IWM: INTEGRATION COSTS Transaction, restructuring & integration costs estimate unchanged at CHF ~420m Update and estimated breakdown over time Pre-tax, CHFm ~420 Transaction 51 ~25% ~25% ~25% costs IT costs (incl. on- ~35% ~35% 193 boarding) ~35% Incentives ~30% ~30% 109 ~30% 29 10 Others ~10% ~10%
Slide 29: Capital Development – Basel III Phase-in
CAPITAL DEVELOPMENT Basel III phase-in CHF m 30.06.2015 31.12.2015 30.06.2016 Change Basel III Basel III Basel III phase-in phase-in phase-in Equity at the beginning of the period 5,338 5,338 4,942 -7% Julius Baer Group Ltd. dividend -224 -224 -246 +10% Net profit (IFRS) 40 123 362 +196% Change in t
Slide 30: Capital Development – Basel III Fully Applied
CAPITAL DEVELOPMENT Basel III fully applied CHF m 30.06.2015 31.12.2015 30.06.2016 Change Basel III Basel III Basel III fully applied fully applied fully applied Equity at the beginning of the period 5,338 5,338 4,942 -7% Julius Baer Group Ltd. dividend -224 -224 -246 +10% Net profit (IFRS) 40 123 3
Slide 31: Balance Sheet – Financial Investments AFS
BALANCE SHEET – FINANCIAL INVESTMENTS AFS CHF m 30.06.2015 31.12.2015 30.06.2016 in Change vs. % 31.12.2015 Money market instruments 2,104 2,298 2,723 16% +18% Debt instruments 12,578 14,177 14,518 83% +2% Government and agency bonds 1,993 3,560 3,411 20% -4% Financial institution bonds 6,641 6,187
Slide 32: Breakdown of AuM
BREAKDOWN OF AUM Asset mix 30.06.2015 31.12.2015 30.06.2016 Equities 27% 27% 26% Bonds (including Convertible Bonds) 19% 19% 20% 1 Investment Funds 24% 23% 24% Money Market Instruments 3% 4% 3% Client Deposits 21% 21% 20% Structured Products 5% 5% 5% 2 Other 1% 1% 2% Total 100% 100% 100% Currency mi
Slide 33: Julius Baer: Pure-Play Private Banking Group
JULIUS BAER: PURE-PLAY PRIVATE BANKING GROUP Well positioned for further growth KREUZLINGEN BASLE ST. GALLEN • Rich heritage – celebrated ZURICH ZUG 125 years in 2015 LUCERNE KIEL BERNE • Premium brand in global wealth DUBLIN HAMBURG AMSTERDAM ST. MORITZ management LONDON DUESSELDORF FRANKFURT LAUSA
Slide 34: 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