Julius Baer, which has been transferring over assets
acquired from its purchase last year of the non-US wealth business of Bank of America
Merrill Lynch, said today that total client assets at end-June stood at SFr304
billion ($323.2 billion), a 10 per cent gain since the end of 2012.

Assets under management rose by 15 per cent – SFr28 billion –
to SFr218 billion, of which SFr24 billion came from the acquired BoA
Merrill (IWM) business. Based on figures since the end of June, Julius
Baer said the integration
of the acquired business is “advancing rapidly across multiple
locations”.
After the end of June, total acquired AuM stood at SFr47 billion.

“On the back of a recovery in client activity and better
cost efficiency, our group markedly improved its operational performance in the
first half of 2013. At the same time, we made tremendous progress in the
integration of IWM, which makes us confident that we will achieve our goal of
having 80 per cent of targeted IWM client assets reported at Julius Baer by the
end of this year,” Boris Collardi, chief executive of Julius Baer, said in a
statement.

Adjusted profit before taxes rose 28 per cent to SFr319
million from a restated level of SFr249 million a year ago. The related income
taxes increased from a restated level of SFr41 million to SFr57 million.

Outside of the impact of the acquired AuM, the rise in
assets under management was driven by net new money of SFr3.4 billion, a
positive currency impact of SFr2 billion and the SFr200 million from the
acquisition of a 60 per cent equity participation in TFM Asset Management,
partly offset by the disposal on 31 May of Julius Baer’s former Italian onshore
subsidiary Julius Baer SIM, with SFr1 billion in AuM, as well as by a
marginally negative market performance of SFr1 billion.

Julius Baer said market performance was hit by several
clients’ exposure to under-performing asset classes such as emerging market
securities and gold as well as by the global market corrections in June 2013,”
according to a statement today. The firm said it reported a “clearly positive
performance across practically all discretionary mandates it manages”.

Due to the focus on acquiring the BoA Merrill unit, the pace
of standalone net hiring of relationship managers decelerated, which was one
of the factors behind the year-on-year slowdown in the net new money rate to
3.6 per cent (annualized).

Operating income

Operating income rose to SFr1.077 billion, a year-on-year
increase of 25 per cent, above the 20 per cent year-on-year increase in average
AuM to SFr212 billion.

The gross margin (including the businesses transferred in
February, April and at the end of May 2013), improved to 102 basis points (H1
2012: 98 bps, H2 2012: 94 bps).

Net commission and fee income went up by 27 per cent to SFr599
million, driven by the increase in average AuM and a recovery in client
transaction volumes. Net interest and dividend income declined by 15 per cent
to SFr275 million as the benefit of the increase in loan volumes was more than
offset by a year-on-year decrease in dividend income on trading portfolios from
SFr90 million to SFr33 million.

Revised accounting standards related to the group’s pension
plan that became effective on January 1, 2013 caused a restatement of certain
expense and balance sheet items for the 2012 reporting period. The restatement
increased reported operating expenses for the full year 2012 by SFr12 million
and reduced 2012 adjusted net profit by SFr10 million.

As a result, the adjusted cost/income ratio declined to 69
per cent; excluding the expenses related to the US tax situation, the adjusted
cost/income ratio was 68 per cent, the bank said.