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Julius Baer in profits slump as split nears

SWISS private bank Julius Baer saw profit before tax slump by 37 per cent in the first half, as cost cuts failed to outpace dwindling revenues.<br /><br />Net profit at the bank fell to Sfr324m (&pound;184m) from Sfr510m in the same period last year, as it suffered a 24 per cent decline in operating income to Sfr1.24bn, driven by 25 per cent lower assets under management.<br /><br />The fall in revenues was not offset by the chief executive Johannes de Gier&rsquo;s success in cutting costs by 12 per cent to Sfr832m, achieved by slashing jobs, paying lower bonuses and reducing expenses on costs such as marketing.<br /><br />However, total assets under management were up by nine per cent to Sfr299bn, the bank said, adding that its plan to split traditional banking and asset management operations were on track to complete by the end of the third quarter.<br /><br />The private banking side of the business, which will be named Julius Baer Group, attracted new client assets totalling Sfr4bn or six per cent annualised, lower than expected as Europe&rsquo;s wealthy shied away from holding large stockpiles of cash.<br /><br />&ldquo;They are still fairly risk-averse, which will obviously impact our results if this continues in the second half of the year,&rdquo; said chief financial officer Dieter Enkelmann on a conference call.<br /><br />Total client assets rose by 10 per cent to Sfr211bn in the half year, while assets under management were up 12 per cent from the end of 2008 to Sfr142bn. <br /><br />Net profit in the division totalled Sfr246m, down by 13 per cent year on year.<br /><br />The asset management operation, GAM Holding, arrested a decline in outflows to Sfr500m, helping the business to a six per cent rise in assets under management to Sfr156bn.