Major Swiss private bank announces unexpected portfolio impairment ahead of interim report, separate from previous Signa-related losses, impacting first-half profits.
"The review of our credit books is still ongoing"
Julius BĂ€r, one of Switzerland's premier private banks, has announced an unexpected CHF130 million ($157 million) portfolio impairment. The revelation came just two days before the scheduled release of their interim report, catching market observers off guard. This development marks another significant financial adjustment for the Zurich-based institution, though bank officials have emphasized that this write-down is entirely separate from the previous CHF606 million loss related to the Signa group collapse.
The CHF130 million write-down is expected to significantly impact the bank's first-half profits for 2025, pushing them below the previous year's figure of CHF452 million. The impairment has affected the bank's cost-to-income ratio, which has risen to 72% from 71% in the second half of 2024. Without these adjustments, the ratio would have improved to 66%, indicating underlying operational efficiency. The bank has made substantial progress in reducing its private loan portfolio to less than CHF200 million, representing a more than 50% reduction since the end of 2024 and now constituting just 0.4% of total lending.
In response to recent challenges, Julius BĂ€r is implementing significant organizational changes to strengthen its risk management framework. From July 1, the bank will reorganize its legal and compliance functions under the leadership of Group General Counsel Christoph Hiestand. A notable development is the establishment of a standalone Compliance function that will report directly to the CEO, with the Head of Compliance joining the Executive Board. The bank is also completely exiting the private credit business, demonstrating a strategic shift in its risk appetite and business focus.
Despite market turbulence, Julius BĂ€r has maintained steady operational performance in the first four months of 2025. The bank attracted net new money of CHF4.2 billion, primarily from key markets in Asia (notably Hong Kong and Singapore) and Western Europe (particularly Germany and UK). Assets under management stood at CHF467 billion, reflecting a negative currency impact of CHF28 billion due to the stronger Swiss franc. The bank remains committed to achieving its announced cost savings of CHF110 million, with implementation costs estimated at CHF55 million. However, management maintains a cautious outlook, citing ongoing global market uncertainties and expecting first-half profits to fall below the previous year's levels.