(Adds market reaction, analyst note)
By Michael Shields and Brenna Hughes Neghaiwi
ZURICH, Nov 20 (Reuters) - Julius Baer said on Monday its assets under management had hit a record 393 billion Swiss francs ($397 billion) after a 17 percent rise in the first 10 months of 2017.
The Swiss private bank said the rise was the result of significant net inflows, a continued positive market performance, and a stronger euro versus the Swiss franc.
“Momentum was particularly strong in emerging markets and the Asia Pacific region,” Zurich-based Baer said in a statement.
In July, the bank reported its most successful six months of attracting new assets from wealthy clients since the financial crisis, with Chief Executive Boris Collardi striking an optimistic tone for the rest of 2017.
A hiring spree last year has helped the bank gain new clients and bring in fresh money, an indicator of future earnings in private banking.
The group’s underlying cost/income ratio continued to improve towards its 64-68 percent medium-term target range.
“For the first 10 months, the cost/income ratio was below 69 percent, compared to 69.1 percent reported in the first half of the year. The cost/income ratio is expected to improve into the medium-term target range in 2018” provided market conditions do not worsen significantly, it said.
Gross margin fell just below 90 basis points from slightly under 92 basis points in the first six months due to a slowdown in clients’ foreign exchange trading.
Shares in Julius Baer were trading 0.9 percent higher by 0903 GMT at 59.55 Swiss francs.
“Julius Baer’s short update after ten months of the year confirms a good momentum, driven by continued good net inflows... However, a strong market performance and a weaker Swiss franc helped boost AuM (assets under management) significantly (approximately 70 percent of AuM growth), “ Vontobel analyst Andreas Venditti said in a note.
Vontobel’s slightly increased price target of 55.5 francs per share assumed no market correction or strengthening of the Swiss franc, he added.
$1 = 0.9892 Swiss francs Editing by Christian Schmollinger, Stephen Coates and Alexander Smith