Julius Baer Reports Excellent Key Metrics

Wide-moat Julius Baer reported strong underlying fundamentals in its third-quarter trading update. Julius Baer only reports full results twice a year: from the measures disclosed by Julius Baer, however, we estimate that pretax operating profits are around 35% higher for the first nine months of 2020 compared with the same period last year, and we estimate strong revenue growth of around 10% year on year. Julius Baer disclosed a common equity Tier one ratio of 14.3% at the end of September, an improvement compared with the 14% common equity Tier one ratio it disclosed at the end of 2019 and well above the 11% self-imposed minimum common equity Tier one ratio. Subject to shareholder approval on Nov. 2, Julius Baer will pay the outstanding half of its 2019 dividend--CHF 0.75 per share on Nov. 6. It confirmed it continues to accrue for a dividend based on 2020 earnings. Depending on regulatory approval we believe Julius Baer should be able to pay a 2020 dividend of at least CHF 1.50 in April 2021. We maintain our wide moat rating and increase our fair value estimate slightly to CHF 57/share from CHF 55/ share previously. We believe Julius Baer continues to offer value, especially to investors looking for a stable, high-quality investment in European financial services.