Swiss bank Julius Baer sees profits jump 15% in 2012

Swiss private bank Julius Baer on Monday posted a 15-percent hike in its 2012 net profit, largely meeting market expectations, but nonetheless saw its share price shrink amid disappointment over its margins.

Net profit at the bank, which specialises in wealth management, jumped to 298 million Swiss francs ($328 million, 240 million euros) last year, while its assets under management swelled 11 percent to 189 billion Swiss francs, it said in a statement.

"We remained well in favour with clients in all our markets in 2012," company chief executive Boris Collardi said in the statement.

He said "substantial net new money inflow near the top end of our target range underlines the fundamental strength" of the bank.

Analysts polled by financial agency AWP had expected the Zurich-based bank to rake in a net profit of 275 million Swiss francs last year, while managing 189.3 billion in assets.

Julius Baer, one of Switzerland's biggest private banks, however saw its gross margins fall to 96 base points from 105 a year earlier as client activity contracted.

Its net trading income for instance plunged 36 percent to 173 million Swiss francs as activity on exchange markets slowed in step with currency volatility.

"The gross margin is clearly under pressure as we expected," Vontobel analyst Teresa Nielsen said in a research note.

Following the news, the bank saw its share price slip nearly 3.0 percent to 36.44 Swiss francs in late afternoon trading on a Swiss stock exchange down 0.66 percent.

Speaking to reporters in Zurich, Collardi however insisted the bank was seeing signs that clients were regaining their appetites for risk.

"Clients are really going back into equities," he said, pointing out that the bank had seen healthy cash inflows in January.

Last year though, Julius Baer saw its net inflows slip 5.7 percent to 9.7 billion Swiss francs, the bank said, adding that its board would propose a dividend of 0.60 Swiss francs for 2012, unchanged from the year before.

Analysts meanwhile said Monday it remained unclear how the bank's purchase of a Merrill Lynch unit would affect its results.

"Uncertainty about this remains high and the market is waiting to see concrete results," ZKB analysts said in a research note.

Julius Baer announced last August that it would buy Merrill Lynch's wealth management business outside the United States and Japan for some 860 million Swiss francs, in a bid to strengthen its presence in emerging markets.

The purchase was finalised last week, the bank said, with Collardi insisting the integration was "well on track."

The bank said the take-over would likely have a slightly negative impact on its results this year due to restructuring and integration costs, but that as of 2015 it would increase the value of each share by around 15 percent.