May 23, 2018 / 7:30 AM / 3 months ago

UPDATE 1-Swiss bank Julius Baer's managed wealth hits record

(Adds analyst comment, detail and background)

ZURICH, May 23 (Reuters) - Assets under management at Julius Baer rose 3 percent in the first four months of 2018 to a record 401 billion Swiss francs ($404 billion), the Swiss private bank said on Wednesday.

"The rise in AuM (assets under management) came on the back of continued net inflows as well as a positive currency impact, the latter mainly following the strengthening of the U.S. dollar in April," the Zurich-based bank said in a statement.

Chief Executive Bernhard Hodler in January said 2018 would be a good year for Switzerland's third-largest listed bank but would be unlikely to keep pace with 2017's bumper net money inflows, which followed an earlier hiring spree.

Baer said it brought in net new money at a growth rate above 5 percent in the first four months of 2018, in line with its 4-6 percent medium-term target range.

"Overall we -- and the market -- underestimated the dynamic of business performance in the first four months," Michael Kunz of Zuercher Kantonalbank said in a note, adding the bank would likely raise its estimates for Baer. "Julius Baer has successfully carried 2017's momentum into the current year."

Hodler, who took over from long-time boss Boris Collardi after his departure for independent wealth manager Pictet in November, in January said the bank would push ahead with hiring more client managers and looking for deals.

Baer aims to hire a net 80 relationship managers this year.

With a typical lag of around 18 months for a new banker to break even, Kunz said Baer's strategy of recruiting more private bankers in 2016 to attract new clients was proving successful and bearing fruit faster than expected.

Baer said its gross margin rose by 5 basis points from the second half of 2017 to 93 basis points thanks to an increase in client activity in January as well as March.

The group's underlying cost/income ratio continued to improve, at just below 67 percent falling near the middle of the bank's 64-68 percent medium-term target range.

Its shares, which had risen 6 percent so far this year, fell 1.5 percent in early trade, lagging a European banking sector index that was down 0.7 percent.

$1 = 0.9924 Swiss francs Reporting by Brenna Hughes Neghaiwi, editing by John Miller and Michael Shields

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