Julius Baer Flows Beat as CEO Seeks to Move Past Signa Hit

(Bloomberg) — Julius Baer Group Ltd. reported better-than-expected inflows in the first half of the year while keeping investors waiting for clarity on future buybacks.

Clients added a net 7.9 billion Swiss francs ($9.9 billion) in the six months through June, double the amount a year ago and exceeding analysts’ estimates. Net income fell 35% to 295 million francs, reflecting the impact of a previously disclosed loan loss allowance and a divestment in Brazil.

The shares swung between gains and losses as the lender, run since January by new Chief Executive Officer Stefan Bollinger, provided little new information about an ongoing regulatory review that will determine its ability to resume buybacks.

“We are fully committed to doing share buybacks over time,” Bollinger said. “The timing is just out of our control.”

The CEO and new Chairman Noel Quinn are seeking to put the bank on a path for growth again after losses linked to the collapse of Rene Benko’s real estate empire prompted the wealth manager to shake up its top management. Yet a drip feed of bad news has complicated their mission, including a review by regulator Finma.

The firm put buybacks on hold when reporting the full extent of the Signa hit in February last year. The bank’s executives have since said they are awaiting the completion of the review before deciding on buybacks.

Shares of Julius Baer rose as much as 3.4% before reversing gains to fall 0.9% at 10:44 a.m. in Zurich, as banks stocks declined more broadly.

“While it is early days in the execution of the strategy, net new money trends and operating performance especially on costs were encouraging,” Anke Reingen, an analyst at RBC Capital Markets, wrote in a note.

Julius Baer said it hasn’t found a need so far for more loan loss allowances as it continues the review of its credit book, which is expected to be completed “in the next few months.” In May, the bank booked a surprise 130 million-franc charge related to its private debt business and selected positions in its mortgage operation.

As part of his turnaround plan, the new CEO has slashed the top management ranks and announced hundreds of job cuts. He has cautioned that his restructuring efforts will push up expenses at first, before bearing fruit from next year.

Julius Baer said on Tuesday that 78 relationship managers have left so far this year, most of them for performance reasons.

(Updates with CEO comment in fourth paragraph.)

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