8/31/2023 0 Comments Julius baer private bank![]() Post-crisis revenue margins increased as costs slightly increased. Also, pre-crisis Julius Baer had pre-tax margins that were continuously above 35bps even with lower revenue margin. Julius Baer has been able to achieve nearly 4-6% net new money pre and post-financial crisis indicating that the company has the brand and services that attracts new assets. Comparing the above characteristics with Julius Baer's performance we see that Julius Baer has been performing well. Julius Baer has performed well even through the depths of the financial crisis, as seen below. Scale that keeps all costs low by spreading out and sharing functions across individual markets.Plenty of liquidity above and beyond regulations.95bps or higher of AUM in revenue margins.Pre-tax margins above the average current average of 24bps, closer to 35bps of AUM.Focus on emerging markets where there is growing affluent market.Consistently achieve 4-6% net new money (inflows).I've included the characteristics that I consider to be the hallmarks of a well run private bank in today's climate: The characteristics of a top private bank haven't changed much to what they were before the financial crisis. Additionally, net inflows of assets averaged only 1.9% per annum or only 25% of pre-crisis levels. According to McKinsey's 2013 private banking survey one and six booking centers recorded pre-tax losses in 2012, which is unheard of in this industry. Since the financial crisis, however, pre-crisis private bank profits of 35bps of AUM fell 30% leading to a wide gap between the winners and losers. It isn't a surprise that private banking was one of the most attractive parts of the European financial services sectors with their large profits and growth. Private banks fit this mold well and only need small amounts of capital to grow through acquisitions or attracting talented relationship managers. Generally, I like to find companies that have low maintenance capital expenditures, sustainable cash flows with the potential for growth and management that have a history of making wise acquisitions and when that is not possible, giving back capital to shareholders through dividends and share repurchases. A moderately successful integration of IWM could lead shares 34% higher than today's price. Julius Baer is on track to fully integrating Merrill Lynch's International Wealth Management IWM segment and excess liquidity should be given back to shareholders to the tune of CHF 1.4 billion, or nearly 15% of today's market cap, in the near future. ![]() The market's pessimism is correct in the short run, but I do not think they will last much further into the future for the top private banks. The market continues to be negative towards European private banks as most have lost a significant portion of their prior profitability, new offshore tax implications, market volatility has risen and acquisition integration comes into question. The company has consistently achieved top industry revenue margins, pre-tax profit margins and cost/income ratios while also growing the business through strategic acquisitions. The company has received 37 awards across the globe in the past 5 years as one of the top private banks and their business performance is evidence of their excellence. Julius Baer has a long history reaching back two centuries to 1890 and is likely to be around for a number of years in the future. The company's shares are traded on the SIX Swiss Exchange under the ticker (BAER.VX) as well as being traded over the counter in the US under the ticker ( OTCPK:JBAXY). ![]() Julius Baer is a leading Swiss Private Bank with operations in 25 countries. Management's Tier 1 capital target of 12% would mean nearly 15% of current market cap could be given back to shareholders by 2015 Overcapitalized with BIS Tier 1 capital of 24.5%.Asia AUM expected to grow to ~25% of group AUM by 2015, which will help with growth.It got out of the brokerage business, acquired and integrated numerous private banks, sold off GAM and Artio to focus on the core private banking business, and merged its multiple share classes into one class. Baer's management team has a history of making advantageous strategic moves.Baer is the top private bank in terms of economics while continually carving its moat with larger scale, diversification and emerging markets.Private Banking Business: Highly profitable and low capex.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |