Julius Baer Updates Targets For Years 2026 To 2028; Plans CHF 130 Mln Efficiency Measures

Julius Baer has updated its medium-term targets for 2026-2028, projecting net new money growth of 4% to 5% by 2028 and an adjusted cost/income ratio below 67% by 2028. The firm anticipates an adjusted return on CET1 capital of at least 30% over the same period, supported by additional efficiency measures yielding 130 million Swiss francs in savings by 2028. While the capital distribution policy remains unchanged, a share repurchase program is contingent on clarity from FINMA.

Analysis

Julius Baer Group Ltd. has updated its medium-term targets for the years 2026 to 2028, citing progress since January 2025 in addressing legacy issues and immediate pressure points. The bank's new guidance for this strategic cycle includes net new money improving to a range of 4% to 5% by 2028, an adjusted cost/income ratio targeted below 67% by 2028, and an adjusted return on CET1 capital (RoCET1) projected to be at least 30% over the 2026-2028 cycle. To achieve these objectives, Julius Baer plans further efficiency measures amounting to 130 million Swiss francs in savings by 2028, with an expected cost-to-achieve of around 50%, focusing on non-personnel expenses and operational optimization; this complements an existing 110 million franc cost program anticipated to be surpassed by approximately 20 million francs. CEO Stefan Bollinger affirmed that significant progress has been made "Since January" in strengthening the organization, underscoring his conviction in the business's potential and clear strategic agenda. While the company's capital distribution policy remains unchanged, the initiation of a share repurchase programme is explicitly contingent on receiving clarity from the Swiss Financial Market Supervisory Authority (FINMA), representing a key regulatory consideration. This outlook and strategic update are accompanied by a strongly positive sentiment (0.7 score) and an optimistic tone regarding the bank's future performance.

Key Decisions for Investors

• Investors should acknowledge the ambitious new medium-term targets as a positive sign of management's commitment to enhance growth and efficiency, while closely monitoring the execution capabilities required to achieve these multi-year financial goals.
• The explicit dependency of any future share repurchase program on FINMA's approval introduces a significant regulatory variable that could impact capital return strategies and warrants careful observation.
• It is advisable to track the progress of the 130 million Swiss franc efficiency program and its impact on key performance indicators such as the cost/income ratio, net new money, and RoCET1 relative to the new targets.