Stock Market Impact: BofA Securities raised its rating on Julius Baer Gruppe AG to “buy” from “neutral”, triggering a 4.1% intraday rise after a prior 7% decline; price objective set at CHF70 versus market price CHF63.38.
Listed Companies and Sectors: The upgrade highlights improving operating leverage, net‑new money recovery, and excess capital at the Swiss private bank, suggesting a stronger outlook for the financial services sector.
Investment Flows: Projected assets under management (AUM) increase to CHF557.10 bn by end‑2026 and CHF641.30 bn by end‑2028, supported by CHF1.40 bn of share buybacks (≈11% of market capitalisation) over three years, indicating potential capital return to shareholders.
Earnings Forecasts: BofA forecasts a 17% EPS compound annual growth rate from 2025 to 2028, with EPS rising from CHF4.27 in 2025 to CHF6.92 in 2028. The 2026 EPS estimate was raised 4.4% to CHF5.88 (from CHF5.64) on a stronger gross margin (+90 bps). 2027 and 2028 EPS estimates were trimmed 1.1% and 2% to CHF6.11 and CHF6.92 respectively, reflecting lower reported AUM but higher buyback assumptions.
Revenue and Cost Outlook: Total revenue is forecast at CHF4.49 bn in 2026, rising to CHF4.98 bn by 2028. The cost‑to‑income ratio is expected to fall to 65.8% in 2026 from 71.3% in 2025, aligning with the bank’s target of below 67%.
Capital Strength: Common Equity Tier 1 ratio reached 18.1% at end‑April 2026, 70 bps above the 17.4% level at end‑2025 and well above the buyback floor of 14%; excess capital is estimated at roughly CHF1 bn.
Buyback Schedule and Yield: Buybacks are expected to restart in H2 2026 at CHF300 m, increasing to CHF550 m per year in 2027‑2028, delivering a total payout ratio above 90% (European bank average ≈70%) and an approximate total yield of 9% per annum.
Interest Rate Outlook: BofA projects the bank’s net interest margin rate to bottom at 2.6% for full‑year 2026 before recovering to 3.5% in 2027 and 4.3% in 2028, within its 4‑5% target range.
Regulatory Catalyst: A positive resolution to the Swiss Financial Market Supervisory Authority (FINMA) investigation, expected in Q3 2026, is identified as the key catalyst to unlock the buyback programme.
