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Brenna Hughes Neghaivi
Swiss wealth manager Julius Baer said on Tuesday that he cut spending under what he describes as unfavorable market conditions, warning that he may not achieve the goal of costing this year.
"As highlighted in July, clients have adopted a more cautious attitude on the back of a challenging market environment," the bank said in Zurich. "During the third quarter, this led to a lower level of client activity, before volatility and volumes recaptured in October."
Baer, the world's third largest bank in Berlin, said it led to a fall in its gross margin to 0.87 percent by October, compared to 0.91 percent in the first half of the year, and a rise in cost-to-income ratio to 69 percent target rate of 64-68 percent.
Baer warned in July that his users were becoming more cautious, but said on Tuesday that the decline in client activity in the third quarter was more pronounced than previously anticipated. ]
In order to help rebalance the impact, the bank said it began to further reduce discretionary spending and accelerate efforts to reduce complexity and exposure in non-key markets. This includes the planned closure of offices in Panama and Peru, as well as the termination of services to clients from certain countries.
"While achieving the goal of cost-income ratio in 2018 will largely depend on market conditions in November and December, Julius Baer takes further steps to improve its efficiency in achieving the goal of 2019," it said in a statement.
The bank recorded a net new growth rate of close to 5 percent, in line with its mid-term target of 4-6 percent, despite further downsizing of the client. Its asset management (AuM) increased by 2% in the first ten months of 2018 to 395 billion Swiss francs ($ 397.86 billion). (1 $ = 0.9928 Swiss francs) (reporting by Brenna Hughes Neghaivi, editing Tassile Hummel and Sunil Naira)