Julius Baer Group Ltd.
Interim Management Statement for the first four months of 2023*

Ad hoc announcement pursuant to Art. 53 LR

Solid start into the year despite challenging market developments – Strong relationship manager hiring pipeline – Significant capital generation

Zurich, 23 May 2023 – The first four months of 2023 provided a challenging backdrop for wealth managers, with uncertainties in particular areas of the banking sector towards the end of the period highlighting the importance of Julius Baer’s outstanding financial strength. Over the period, the Group’s capital position and balance sheet liquidity were further reinforced from the already solid levels reported at the end of 2022.

The stability and resilience of Julius Baer’s business model proved to be attractive to clients and talents alike: After a slow start, net new money inflows accelerated in the latter part of the reporting period, and reinvigorated recruiting efforts resulted in increased relationship manager (RM) onboarding as well as a strong hiring pipeline for the remainder of the year. Looking ahead, actual and forthcoming significant growth in the Group’s RM base is expected to meaningfully benefit the generation of net new money over the medium term.

An intermittent rebound in both stock and bond markets supported the valuation of assets under management, offsetting the impact of a weaker US dollar. Nevertheless, clients’ investment stance remained relatively cautious. The decline in market volatility from the levels seen in the second half of 2022 constrained the overall contribution from the activity-driven revenue components.

The successful shift to profitable growth achieved in the 2020–2022 strategic cycle has put Julius Baer on a strong footing to increase investments in growth in the current 2023–2025 cycle. Despite the start of this investment cycle, operating performance was largely stable, with the gross margin, adjusted cost/income ratio, and adjusted pre-tax margin close to the levels achieved in the second half of 2022.

Gross margin over 92 basis points

The gross margin for the first four months of 2023 amounted to just over 92 basis points (bp), slightly below the close to 93 bp achieved in the second half of 2022 but running well above the 87 bp attained in full year 2022. Compared to the second half of 2022, a modest increase in the gross margin contribution from net commission and fee income, on the back of somewhat higher client transaction activity, was balanced by slightly lower contributions from net interest income as well as net income from financial instruments measured at FVTPL**, which was impacted by the notable decline in market volatility.

Following the further interest rate hikes since the beginning of the year, the overall gross margin contribution from the revenue components directly sensitive to interest rates grew modestly. While the contribution from net interest income experienced a modest decline, mainly driven by a further shift from current accounts into call- and term deposits, this effect was more than offset by an improvement in treasury swap income (recorded under net income from financial instruments measured at FVTPL).

Cost/income ratio 66% and adjusted pre-tax margin close to 31 bp

The successful reset in cost efficiency in the previous strategic cycle has created room to fund greater investments in growth in the next three years. As laid out in the Strategy Update in May 2022, in the current 2023–2025 cycle Julius Baer will put an increased focus on attracting top talent in its key markets with a view to further boosting its scale in those important geographies and has started to invest further in technology and product innovation.

Julius Baer’s unique and resilient pure wealth management business model, supported by its open product platform, strong and liquid balance sheet as well as its solid capital position, continues to make it an attractive destination for top talent. Partly helped by the recent turbulence elsewhere in the sector, Julius Baer saw the number of RMs already increase by almost 40 FTEs in the first four months of 2023, with a strong hiring pipeline firmly in place for the remainder of the year.

Despite these ongoing growth investments, the adjusted cost/income ratio was just over 66%, largely unchanged from FY 2022 and only slightly above the 65% reported for the second half of 2022. The pre-tax margin was close to 31 bp, compared to 27 bp in FY 2022 and unchanged from the second half of 2022.

Assets under management CHF 429 billion

At the end of April 2023, assets under management amounted to CHF 429 billion, a year-to-date rise of 1%. The increase was driven by positive market performance and net new money inflows, partly offset by a negative currency impact, mainly from the strengthening of the Swiss franc against the US dollar, a development that accelerated in April.

Net new money went off to a slow start at the beginning of 2023 and continued to be impacted by client deleveraging, albeit to a lower extent than at the start of 2022. Net inflows improved in the latter part of the period, resulting in net new money of CHF 3.5 billion by the end of April, or CHF 5.2 billion when excluding the effect of deleveraging, with solid contributions from clients domiciled in Asia (especially Hong Kong), Europe (especially the UK & Ireland and Switzerland), the Middle East, and Israel.

Strongly capitalised, highly liquid

Julius Baer’s solid capital and liquidity positions strengthened further in the first four months of 2023.

The share buy-back programme launched in March 2022 was completed, as planned, on 28 February 2023 at the maximum approved amount of CHF 400 million. Under this programme, Julius Baer repurchased 7,799,460 registered shares, of which 2,074,888 shares (at a combined value of CHF 124 million) in the first two months of 2023. Following the approval received at last month’s Annual General Meeting of shareholders, all the shares bought back under this programme will be cancelled in the next few months.

Supported by the strong profitability as well as the initial ‘pull-to-par’ reversal of last year’s decline in the value of bonds held in the Group’s treasury portfolio (financial assets measured at FVOCI***), the Group’s BIS CET1 capital ratio improved to 15.0% at the end of April 2023 (end 2022: 14.0%).

For the same reasons, and additionally helped by the successful placement of EUR 400 million of perpetual non-cumulative Additional Tier 1 securities in February 2023, the BIS total capital ratio improved to 24.3% (end 2022: 21.2%).

At these levels, the Group’s BIS CET1 and BIS total capital ratios remain well above the Group’s own floors of 11% and 15% respectively, and significantly in excess of the regulatory requirements of 8.3% and 12.5% respectively.

The Group’s tier 1 leverage ratio improved to 4.9% (end 2022: 4.3%), substantially above the regulatory requirement of 3.0%.

*) Based on unaudited management accounts. This media release contains certain financial measures that are not defined or specified by IFRS, the definitions of which are provided in the Alternative Performance Measures document available at www.juliusbaer.com/APM.

**) Fair value through profit or loss

***) Fair value through other comprehensive income

Contacts

Media Relations, tel. +41 (0) 58 888 8888

Investor Relations, tel. +41 (0) 58 888 5256

Important dates

24 July 2023: Publication and presentation of 2023 half-year results, Zurich

20 November 2023: Publication of Interim Management Statement for first ten months of 2023

About Julius Baer

Julius Baer is the leading Swiss wealth management group and a premium brand in this global sector, with a focus on servicing and advising sophisticated private clients. At the end of April 2023, assets under management amounted to CHF 429 billion. Bank Julius Baer & Co. Ltd., the renowned Swiss private bank with origins dating back to 1890, is the principal operating company of Julius Baer Group Ltd., whose shares are listed on the SIX Swiss Exchange (ticker symbol: BAER) and are included in the Swiss Leader Index (SLI), comprising the 30 largest and most liquid Swiss stocks.

Julius Baer is present in around 25 countries and over 60 locations. Headquartered in Zurich, we have offices in key locations including Bangkok, Dubai, Dublin, Frankfurt, Geneva, Hong Kong, London, Luxembourg, Madrid, Mexico City, Milan, Monaco, Mumbai, Santiago de Chile, São Paulo, Shanghai, Singapore, Tel Aviv and Tokyo. Our client-centric approach, our objective advice based on the Julius Baer open product platform, our solid financial base and our entrepreneurial management culture make us the international reference in wealth management.

For more information, visit our website at www.juliusbaer.com

Cautionary statement regarding forward-looking statements

This media release by Julius Baer Group Ltd. (‘the Company’) includes forward-looking statements that reflect the Company’s intentions, beliefs or current expectations and projections about the Company’s future results of operations, financial condition, liquidity, performance, prospects, strategies, opportunities and the industries in which it operates. Forward-looking statements involve all matters that are not historical facts. The Company has tried to identify those forward-looking statements by using the words ‘may’, ‘will’, ‘would’, ‘should’, ‘expect’, ‘intend’, ‘estimate’, ‘anticipate’, ‘project’, ‘believe’, ‘seek’, ‘plan’, ‘predict’, ‘continue’ and similar expressions. Such statements are made on the basis of assumptions and expectations which, although the Company believes them to be reasonable at this time, may prove to be erroneous.

These forward-looking statements are subject to risks, uncertainties and assumptions and other factors that could cause the Company’s actual results of operations, financial condition, liquidity, performance, prospects or opportunities, as well as those of the markets it serves or intends to serve, to differ materially from those expressed in, or suggested by, these forward-looking statements. Important factors that could cause those differences include, but are not limited to: changing business or other market conditions, legislative, fiscal and regulatory developments, general economic conditions in Switzerland, the European Union and elsewhere, and the Company’s ability to respond to trends in the financial services industry. Additional factors could cause actual results, performance or achievements to differ materially. In view of these uncertainties, readers are cautioned not to place undue reliance on these forward-looking statements. The Company and its subsidiaries, and their directors, officers, employees and advisors expressly disclaim any obligation or undertaking to release any update of or revisions to any forward-looking statements in this media release and any change in the Company’s expectations or any change in events, conditions or circumstances on which these forward-looking statements are based, except as required by applicable law or regulation.