Julius Baer Gruppe Namen

Good morning, ladies and gentlemen. Welcome to today's investor and media conference. I trust you can see our presentation over the screens. For all of our participants who have dialed in over the phone, you will have the opportunity to ask questions at the end of the presentation. As you have seen from today's media release, we have several topics to discuss. Among them are our results for the full year 2023 and as usual our CFO Evi Kostakis will guide you through the financials. But first I would like to touch on the leadership change what we have announced today and for that I would like to give the word to Philipp Brichenbacher our departing CEO.

Thank you Romeo. Good morning ladies and gentlemen. By now you will have read our announcement that I'm stepping down as CEO of Julius Baer. I have offered the board of directors to make my position available and we jointly concluded that it is in the best interest of the company for me to step down. This was not a step I took lightly because my connection and passion for Julius Baer, our clients and our teams run very deep. Yet, as the CEO, I reflect on my personal responsibility for this great firm. My career at Julius Baer has spanned 20 years, through great and through challenging times. My professional growth was defined by a culture of taking ownership, learning from the past, and thereby strengthening the organization. This is exactly what we are doing today And I am contributing to this by supporting all the measures taken, including this leadership change. With the other measures announced today, such as reflecting the full extent of the extraordinary credit event in our 2023 results and the exit from private debt, we draw a clear line and pave the way to move forward and regain the full confidence of our stakeholders in 24 and beyond. It has been an honor for me to serve as CEO of this formidable institution and shape its strategic course over the past five years. What we have achieved was only possible with the trust of our clients, the terrific work of our staff, the backing of our shareholders, and the support of our stakeholders in Switzerland and the many other financial centers around the world we are active in. I am immensely grateful for that. Thanks also to all of you attending our call today for your confidence in Julius Baer. This team, under the new leadership of Nick Dreckmann, will continue to deliver on your expectations, I am convinced. With this, I would like to end my remarks and hand back to Romeo.

Thank you, Philipp. It was important for me to give you the opportunity to address this leadership change in person. My heartfelt thank you and greatest respect also on behalf of the entire board of directors for endorsing the measures we announced today and supporting a change in leadership in agreement with the board. I would like to thank you also for your leadership over the past five years. You have navigated Julius Baer through a challenging time. charting a successful course that is tangible in the many transformational steps that have brought us where we are today. Under your tenure as CEO, the Group produced the two best financial results in its history, further strengthening its leading market position in wealth management across the globe. With the appointment of Nick as an interim CEO, we are putting the leadership of our firm into the hands of one of our most senior executives. Nick has an in-depth knowledge of all parts of our business, front to back, and across many market cycles. With this step, we are also ensuring utmost continuity for all our stakeholders, and I would like to thank him for accepting this challenge. Thank you, Philipp, for being here today. Ladies and gentlemen, we are now moving to the next section of our presentation where Evi and I will present our results and then the two of us will answer your questions. Our results for 2023 were overshadowed by substantial loan loss allowances of 586 million Swiss francs for our largest private debt exposure. These loan loss allowances covered the single largest exposure in its entirety. As already disclosed in November 2023, This exposure comprises three loans to different entities within a European conglomerate. With these highly conservative provisions, we eliminate all uncertainty over potential further impact on Julius Baer's financials going forward. In regard to this largest exposure, our full focus is now on realizing and maximizing the recovery value on individual positions. Given this is an ongoing process, we will not provide additional detail on the individual credit positions or comments on the collaterals. The reminder of the private debt book, lending against non-listed securities or cash flows, amounts to less than 2% of our total loan book. Over the past two months, we have mandated an independent third party for an in-depth review of the full private debt book. I can state with confidence that the remaining book is well diversified and performing. Evi will provide the details on the quality of the private debt book in her presentation. Still, as announced today, we have decided to exit private debt in its entirety. We entered into private debt as a conscious expansion of our historically very successful credit business. It was a step we took in response to client demand. In hindsight, it is clear that the evolution of the private debt business outpaced the adjustment of its framework. We and I personally deeply regret that a single credit event led to the significant provision booked in 2023. I want to apologize to our shareholders, our clients, and to our employees. While there have been no breaches of internal or external rules and regulations related to this position, we misjudged the risk related to this particular exposure. With this, we have not lived up to our commitment of acting as good stewards of our firm. It is therefore in line with this commitment to stability and predictability for our stakeholders that we have taken the decision to fully exit this business. This decision will entail a closely management and controlled wind down of the portfolio. The exit from private debt means that going forward we will refocus our credit activities into areas of traditional strength. Lombard Lending and our largely Swiss mortgage offering. These two areas together make up more than 98% of our loan book already today. Historically, this business has been very successful with a ratio of net credit losses consistently below 20 basis points in any year prior to 2023 and across different market cycles. This isolated credit event is all the more painful because in 2023 our business has been doing well, generating good profitability and net new assets. It is thanks to the strength of our business that we have been able to absorb the resulting negative financial impact and maintain our commitment to capital distribution towards our shareholders. The board and executive management take full responsibility for what happened. In addition to the change in executive leadership, we discussed before, the chair of the Board Risk Committee, David Nicol, will not stand for re-election at the upcoming AGM. And as a consequence of the credit event and of its impact on our performance in 2023, the Compensation Committee of the Board decided that the members of the EXP involved in the credit decision as well as the CEO, will not receive any variable compensation for 2023. The members of the Government and Risk Committee of the Board of Directors will not receive any equity-based compensation. This also includes myself. As part of our efforts to maintain a strong risk culture and in line with our overarching objective, To use our balance sheet with the utmost prudence for the benefits of our clients, the Board of Directors will reinforce its oversight of the risk management framework. Specifically, we will take this opportunity to strengthen our credit framework with a new composition of the credit approval body at executive board level, revised credit policies and approval process as well as the definition of more granular limit framework including appropriate total counterparty exposure limits. All these steps have been discussed with our Swiss regulator FINMA. I would like to thank our employees for the underlying strength of our result. It is thanks to their tremendous efforts that we can close the year in such strong shape. Excluding the loan loss allowances discussed before, we generated the third highest underlying profit before tax in Julius Baer's history. Underlying profit before taxes was 1.12 billion Swiss francs. Solid net new money inflows throughout the year demonstrate the strength of our franchise. They amounted to a total of 12.5 billion Swiss francs or 16.2 billion once the effect of deleveraging is excluded. It is important to note that meaningful inflows took place in the last two months of the year. Overall, assets under management increased to 427 billion Swiss francs, obviously heavily impacted by the strength of the Swiss franc, which nearly entirely offset the positive effects of market performance and leaves ample room for upside in 2024. In 2023, we also increased our hiring efforts with a net addition of 95 relationship managers, backed by our strong reputation as employer of choice for wealth management talents. These investments in growth transpired into a cost-income ratio, an effect that was combined by stable revenues in a challenging market environment. We maintained a strong capital position and a liquid balance sheet. Our CD1 capital ratio increased to 14.6%. remaining well in excess of both regulatory requirements and own floors. And this even when taking into account the increase in loan loss allowances mentioned before. At 260 CHF per share, the dividend is unchanged from the previous year, reflecting our commitment to maintain continuity in our capital distribution policy And this was very important to us. These are just the key points to illustrate the ongoing operating and financial strength of our group. I will now hand over to Evi to give you all the details.