Julius Bär's Record Profits Mask the 'Hockey Stick' Derisking Road Ahead

Asset management hits record AUM and profit, but management guides net-new-money headwinds into 2027 as it executes a risk-overhaul — a deliberate short-term pain for long-term gain.

BAER.SW · Earnings Call · 2026-07-21

A record half, but the real story is the roadmap

Julius Bär delivered a record first half in 2026: assets under management reached CHF 547 billion, up 5% year-to-date, net profit rose 32% like-for-like to CHF 673 million, and the CET1 ratio improved to 18.5%. CEO Stefan Bollinger opened with the positive numbers but the framing quickly shifted to the deliberate drag on growth from the bank's ongoing overhaul. Bollinger: “Asset under management reached CHF 547 billion, up 5% year-to-date, the highest level in our history. Net new money amounted to a solid CHF 5.7 billion…” — Stefan Bollinger, CEO · 2026-07-21 CFO Evie Kostakis was clear that the inflows came despite the framework: “Growth continues to be weighed down by the ongoing rollout of our revised risk and compliance framework.” — Evie Kostakis, CFO · 2026-07-21 That compliance framework — part of the new 2026–2028 strategic cycle — is systematically removing clients and products that no longer fit the bank's risk appetite. Management said the exercise touches high-risk countries, sensitive industries, and complex client structures. The result is a deliberate, multi-year drag on net new money, even as the franchise posts record profitability.

The hockey-stick path

The most significant strategic statement came during the Q&A when Bollinger was asked directly about the shape of net-new-money growth toward the 2028 target of 4–5%. His answer was unambiguous:

We should think more of a hockey stick type of development. given by 2028, we'll have the higher derisking because of the implementation of the risk and compliance framework behind us. And of course, at the same time, also, we'll see the benefit of all the investments we make on the growth side.
Stefan Bollinger, CEO · 2026-07-21

He then quantified the near-term cost: “We should expect some continued headwind into 2027. At the same time, the situation will normalize in 2028.” — Stefan Bollinger, CEO · 2026-07-21 This hockey stick framing is a rare case of management explicitly discouraging extrapolation of current flows — a bold and honest signal to the market.

Cleaning up the legacy

The derisking also means confronting the past. The bank reported CHF 23 million of credit losses, primarily tied to the income-producing real estate portfolio it is managing down. More significantly, it wrote off the largest exposure from the private debt debacle of 2023. Kostakis confirmed: “Indeed, if you look at Note 9 in our half year report, which I assume you've already done, you'll see that we have written off the largest exposure associated with the private debt exposure in 2023.” — Evie Kostakis, CFO · 2026-07-21 This effectively closes the book on that episode, with recovery potential now limited. The credit losses and write-off are a clean-up that frees the balance sheet for higher-quality lending.

Cost/income: a caveated improvement

The cost/income ratio printed at 62.6%, down almost 6 percentage points year-on-year, boosted by the record revenue environment. But Kostakis was quick to temper expectations: "However, it is important to note that this outcome benefited from an exceptionally favorable revenue environment, one that we do not expect to repeat regularly in our planning." She guided second-half cost/income below 67% assuming an 80bp gross margin input factor, with investments in the Swiss platform, efficiency-program costs, and RM hiring all set to weigh on the second half. The message is consistent with the guidance given at the start of the year: “Last year, despite derisking and the year of, I would call it, transition, we were able to bring in CHF 14.4 billion of net new money or 2.9% on an annualized basis…” — Evie Kostakis, CFO · 2026-02-02 and “So from today's perspective, assuming an 80 basis points gross margin input factor… we would expect to land at levels slightly higher than 2025 underlying, on track towards our target of less than 67% by 2028.” — Evie Kostakis, CFO · 2026-02-02 The caveat is that 2026's improvement is not the new steady state. This is a company-specific story — none of these themes (compliance framework, hockey stick, credit losses) appear in the global keyword trajectories for the same period, nor in the earnings calls of other reporters this week. Julius Bär is operating in its own self-imposed purification phase, trading near-term growth for a cleaner, more predictable book. The departure of CFO Evie Kostakis, with a handover to Pete underway, adds a leadership transition to an already busy year. But the board's confidence in the 2028 targets — a cost/income ratio sustainably below 67%, net-new-money growth of 4–5%, and recurring margin grinding toward 39 basis points — remains intact. In short, Julius Bär is executing a deliberate, multi-year reset. The record profits prove the franchise is strong; the hockey-stick guidance proves the leadership is willing to be honest about the near-term costs.