ZURICH (Reuters) – A spike in trading volumes boosted margins for wealth manager Julius Baer <BAER.S> in the first four months of the year, even though markets slid and a strong Swiss franc ate into assets under management.
Baer attributed a 16% rise in gross margins in January to April to an “exceptional increase” in trading volumes.
Chief Executive Philipp Rickenbacher said in a statement it was “too early to assess with any certainty the impact of the COVID-19 crisis on the global economy, the financial markets, and the results of Julius Baer for the remainder of 2020.”
The trading update from Switzerland’s third-largest lender provided the first insight into the impact of the coronavirus crisis on wealth managers in April, after big banks UBS <UBSG.S> and Credit Suisse <CSGN.S> posted bumper profits for the first quarter.
Baer’s shares rose 6.8% in early trading on a strong margin beat and the best cost-income ratio in a decade.
“Baer has followed through on the strong first-quarter wealth management performances at Credit Suisse and UBS, and then some,” Jefferies analysts said in a note.
Baer, which said it would cut 300 this year, pointed to a particularly strong March but said margins were higher during each of the first four months.
The Zurich-based lender said on Tuesday said its three-year strategic programme to pare back costs and boost revenues was on track.
Assets under management fell 8% in the first four months of 2020 to 392 billion Swiss francs ($403 billion), as sliding markets and a stronger Swiss franc failed to offset a 2% rise in net new money growth.
Wealth management inflows, particularly from clients in Europe, helped make up for outflows from clients deleveraging.
The bank cited a slightly negative margin impact from lower net interest income and a moderate rise in expected credit losses, without providing figures.
($1 = 0.9718 Swiss francs)
(Reporting by Brenna Hughes Neghaiwi; Editing by John Miller and Edmund Blair)
