Surprise write-down at Julius Bär ahead of interim report

Keystone / Michael Buholzer

Zurich-based private bank Julius Bär has booked a further CHF130 million ($157 million) impairment on its portfolio, the bank announced on Tuesday evening.

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The announcement came as a surprise, just two days before the interim report was due and shortly after Bloomberg published a story on these value adjustments.

As a result, first-half profits are expected to come in below last year’s figure, when the bank reported earnings of CHF452 million.

The valuation adjustment is unrelated to the fallout from the collapse of Austrian investor René Benko, a bank spokesman told AWP. In 2023, Julius Bär wrote down CHF606 million on loans to Benko’s bankrupt Signa group. Chief Executive Philipp Rickenbacher stepped down in the wake of the losses.

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The new value adjustment follows a thorough review of the group’s remaining loan portfolio. Julius Bär said it applied cautious criteria to assess credit quality, client suitability and the scale of its asset management relationships.

“The review of our credit books is still ongoing,” CEO Stefan Bollinger said during a conference call on Wednesday, adding that he did not expect any further unpleasant surprises.

Julius Bär had already announced plans to exit the private credit business entirely. The bank says it has made significant progress, cutting the value of its private loan portfolio to well below CHF200 million, a reduction of more than half since the end of 2024. Private loans now account for just 0.4% of its total lending.

New risk manager

From July 1, all legal functions, and, for now, compliance, will fall under the leadership of Christoph Hiestand, Group General Counsel. A standalone Compliance function will be established, reporting directly to the CEO. The Head of Compliance will join the Executive Board, with the appointment to be announced in due course.

Changes to the bank’s risk oversight structure will come into effect on July 1, with the Legal Division and Compliance Office set for reorganisation. The move is aimed at strengthening corporate governance and enhancing risk management.

All legal and, for the time being, compliance functions will be placed under the leadership of Christoph Hiestand, Group General Counsel. A separate Compliance function will be created, reporting to the CEO. The Head of Compliance will be a member of the Executive Board and their name will be announced in due course.

Business slightly below expectations

Julius Bär’s operating performance remained steady over the first four months of the year, despite ongoing market and economic turbulence. The bank reported solid net new money of CHF4.2 billion, slightly below the analyst consensus of CHF4.9 billion, according to AWP.

Assets under management stood at CHF467 billion at the end of the first four months, down from CHF497 billion at the close of 2024. The figure includes a negative currency impact of CHF28 billion and came in slightly below analysts’ expectations.

The inflow came mainly from key markets in Asia – particularly Hong Kong and Singapore – as well as Western Europe, with Germany and the UK standing out. It helped partly offset the impact of the stronger Swiss franc, especially against the US dollar.

The bank says it’s on track to deliver the additional CHF110 million in cost savings announced last February. The cuts are expected to boost profitability towards the end of the year. Estimated costs linked to the programme total around CHF55 million, with CHF19 million already booked.

The value adjustments pushed the cost-to-income ratio up to 72%, compared with 71% in the second half of 2024. Without the impairments, the ratio would have improved to 66%.

Management are not optimistic about the future, citing continued uncertainty in global markets. The bank expects first-half profits for 2025 to come in below the same period last year.

Translated from French with DeepL/sp

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