The Swiss private bank said that of the 82 million francs, 70 million were booked against its credit portfolio after Oct. 31, 2023, without identifying the loans in question.
"The overall quality of the loan book and the balance sheet remains unaffected, with a consistently strong capitalisation and high liquidity providing ample capacity to absorb any risks resulting from the group's business," Julius Baer said in an interim update for the first 10 months of 2023.
"Mainly as a consequence of the rise in credit provisions and ... increase in the effective tax rate, the group currently does not expect the full year 2023 net profit level to match the one achieved in 2022."
Investors were caught by surprise that Switzerland's second-largest wealth manager announced higher credit provisions. The bank's shares fell more than 13% in Monday trading, the most since March 2020.
The company has exposure to troubled property group Signa, a source close to the matter told Reuters, adding that Julius Baer was expected to write down some of those loans.
Business Insider reported on Nov. 11 that Baer lent hundreds of millions of francs to the property group.
A Baer spokesperson said the bank could not comment on existing or alleged client relationships.
"Whilst credit hit looks manageable, risk management questions seem inevitable," Jefferies analysts said.
"Investors may well question how — if indeed it is confirmed to be the case — a single client has resulted in such a substantial credit provision being taken and whether there could be other outsized single client exposures."
Vontobel analyst Andreas Venditti said estimates for the full year would have to be lowered after the "worse than expected" results.
The bank said it recorded net new money inflows of 10.3 billion francs for the first 10 months of the year.
Analysts at Zuercher Kantonalbank had expected 15 billion francs, with Baer already reporting inflows of 7 billion francs for the first half of 2023.
Assets under management rose 3% to 435 billion francs during the period, driven mainly by inflows and the strength of the global equity market.
($1 = 0.8855 Swiss francs)
