Julius Baer full year profits up 4%
Julius Baer - FY 2016 net profit of CHF12bn ($12.1bn), up 4% YoY due to an end-of-the-year pick-up in asset gathering.
Late-2016 pick up sees Julius Baer hit asset goal

By Joshua Franklin

ZURICH, Feb 1 (Reuters) - Swiss private bank Julius Baer hit the bottom of its target range for attracting cash from wealthy clients in 2016, providing some relief to investors after larger rival UBS suffered withdrawals at the end of the year.

Wealthy clients have been pulling billions of dollars out of banks to take part in tax amnesty programmes and register previously undeclared assets.

These programmes, which have spread from western Europe to Latin America and Asia, resulted in a net outflow of assets in the fourth quarter at UBS, the world's biggest private bank.

But Baer said on Wednesday it had attracted 12 billion Swiss francs ($12.1 billion) in net new money in 2016, up 4 percent on the year before and at the bottom end of its 4-6 percent medium-term target range. After 10 months of last year, the bank had said growth was "close to" 4 percent.

Net new money is a closely watched indicator of future earnings in private banking. Overall, Baer's assets under management reached 336 billion francs in 2016.

The Zurich-based bank posted 2016 adjusted net profit of 705.5 million francs, ahead of the average estimate of 679 million in a Reuters poll. Net profit under IFRS accounting standards was 619 million francs.

Analysts said the bank's gross margin of 91 basis points compared favourably with UBS.

"The solid gross margin reading is particularly noteworthy, since the peer UBS's WM (wealth management) unit has disappointed on that metric in both 3Q and 4Q," Baader Helvea analyst Tomasz Grzelak wrote in a note. He rates Baer shares as a "buy".

At 1211 GMT, the shares were up 1.1 percent, slightly higher than the European banking sector index.

After making a string of acquisitions in the recent years, Baer mostly focused in 2016 on hiring relationship managers (RMs), or private bankers, to attract new clients, adding a net 116 RMs. The bank expects to hire around 80 RMs per year.

There is a typical lag of around 18 months for a new private banker to break even, but Baer expects its recruitment drive to pay dividends.

"With this number we expect to be well within our target net new money range in the years to come," Chief Executive Boris Collardi said in a call with reporters.

The bank said it would propose a dividend of 1.20 francs per share, compared with 1.10 francs last year.