* Assets under management rise to record 427 bln Swiss francs
* Net new money up at 3% rate
* Shares slip as margin disappoints (Adds market reaction)
ZURICH, May 24 (Reuters) - Julius Baer's assets under management rose 12% in the first four months of 2019 to a record 427 billion Swiss francs ($425.34 billion) as net new money picked up, the Swiss private bank said on Friday, but margins fell, sending its shares lower.
The interim statement showed Switzerland's number-three listed bank was starting to recover from a slow patch but had yet to regain the 4.5% growth in net new money -- an indicator of future profitability -- it generated last year.
"After a soft start to the year, net new money growth accelerated towards the end of the period, resulting in a growth rate of 3% (annualised)," Baer said, pointing to inflows from clients in Asia and Europe and new relationship managers hired last year.
That was still below its 4-6% mid-term target.
Its shares fell 1% by 0900 GMT.
KBW analysts called the interim update "largely disappointing", noting Baer's gross margin of 82 basis points was down significantly from 93 points a year ago.
Baer in February scaled back growth targets and announced large-scale cost cuts after a tough end to 2018 caused it to miss its goals.
It said on Friday its underlying cost/income ratio fell below 73% from 74.3% in the second half of 2018.
"This improvement did not yet benefit from the 2019 cost reduction programme, the implementation of which has started and is on track," it added. The bank anticipated booking one-off severance cost of around 17 million francs, all in 2019, for reducing headcount by a net 2% this year.
Inflows in Baer's core wealth management operations were partially offset by net outflows from the bank's Italian asset manager Kairos following a decline in 2018 performance, Baer said.
"Net new money was also impacted to some extent by a limited number of client exits in the context of the ongoing client risk review project, as well as by modest outflows following a wider application of negative interest rates to large cash holdings," Baer said.
Baer is in the midst of seeking a successor for Chief Executive Bernhard Hodler, its former risk chief who took over at the Zurich-based group when predecessor Boris Collardi abruptly left in 2017 to run unlisted rival Pictet.
$1 = 1.0039 Swiss francs Reporting by Michael Shields; Editing by Tassilo Hummel/Subhranshu Sahu/Jane Merriman