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Julius Baer to cut around 100 jobs amid profit pressure

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Julius Baer to cut around 100 jobs amid profit pressure

Julius Baer is to cut more than 100 jobs in a SFr 100 million (£77 million) cost-cutting drive, as it grapples with lower growth. 

The Swiss private bank, which has embarked on aggressive campaign to grow its UK exposure over the last 12 months under international chief executive David Durlacher, announced its intentions after full-year numbers missed forecasts. 

At 9.30am shares in the bank were down 4.6% at SFr 37.73. 

Net profit for 2018 rose 4% to SFr 735 million, a sharp decline of the 14% growth rate in 2017 and missing analyst consensus of SFr 772 million. 

Assets under management slipped by 2% to SFr 382 billion, largely due to the market volatility in the second half of the year. 

This was offset in part to a 4.5% net increase in inflows to SFr 17 billion, although this was towards the lower end of the bank's 4-6% target range.

Its investment in the UK appeared to be paying off, however, with the bank highlighting 'strong contributions' from the UK, along with Monaco, Germany, Luxembourg, Spain, Asia and the Middle East. 

While the bank kept its inflow target at the 4-6% level, it admitted it could longer hit its pre-tax margin of 30 basis points after falling well short at 24.8bps last year. It has subsequently lowered the medium-term target to 28 bps. 

Chief executive Bernhard Hodler (pictured) said: 'We continue to make strategic growth investments, and have initiated a structural cost reduction program to absorb revenue fluctuations from potential market headwinds over the short to medium term.' 

The company plans to cut costs this year, after a 6% climb in outgoings in 2018 outstripped a 3.6% rise in revenue. This includes eliminating 2% of jobs, equivalent to around 134 of its 6,693 employees. 

'The results from these structural cost reductions are expected to fully materialise in the 2020 financial results, with the aim to reduce the cost/income ratio2 below 68% in line with Julius Baer’s new medium-term target in that year,' the bank said in a statement. 

Hodler added: 'Julius Baer ended 2018 with stable profit and robust net new money growth − and we did so in an environment that was challenging for the entire industry.

'We continue to make strategic growth investments, and have initiated a structural cost reduction programme to absorb revenue fluctuations from potential market headwinds over the short to medium term.

Hodler also highlighted key areas of strategic importance. 

'Our updated financial targets underscore our long-term ambition to pursue sustainable and profitable growth, and to deliver attractive capital returns to our shareholders,' he said. 

'We will follow a clear strategy centred on smarter market coverage, holistic and personalised advice, and technology transformation, aiming above all to enhance client experience, improve efficiency and increase revenues.' 

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