Julius Baer shares drop on weak profit guidance

Shares in Julius Baer tanked on Monday after the Swiss private-banking group warned that annual profits would fall short of last year.

In a trading update, the Zurich-headquartered firm said, following a rise in credit provisions in November and an increase in the effective tax rate, net profits this year are not expected to reach level seen in 2022 – which was the second highest in group history.

In 2022, the company delivered a net profit of CHF950m, which was down 12% on the previous year. Last year the company had a 12.4% tax rate, which has risen to 16.5% as a result of larger pre-tax profit contributions from higher-tax jurisdictions.

By 1252 CET, the stock was down 12.5% at CHF48.76.

Assets under management during the first 10 months of 2023 were up 3% on last year at CHF435bn, helped by net new money inflows and a positive global equity market performance, partly offset by negative currency impacts.

Net new money inflows totalled CHF10.3bn in the 10-month period, up 3%, with solid contributions from clients in Europe, Asia, the Middle East and Israel.

The group's CET1 capital ratio improved to 16.1% by the end of October, up from 15.5% at the half-year stage and 14% at the end of 2022.