Julius Baer's Strategic Shift: A Compelling Buy Amid Cost Discipline and Growth Levers?

The Swiss private banking sector is in flux, with Julius Baer Group (SIX:BAER) positioning itself as a leaner, sharper player in the ultra-competitive wealth management space. Amid a backdrop of rising interest rates and geopolitical uncertainty, the firm has unveiled aggressive 2026–2028 targets aimed at reigniting growth, cutting costs, and delivering shareholder value. The question investors must ask is: Can Julius Baer execute its ambitious roadmap, and does its stock offer a compelling entry point today?

A Bold Roadmap, Backed by Execution

Julius Baer's medium-term strategy hinges on three pillars: net new money growth of 4–5% by 2028, an adjusted cost/income ratio below 67%, and a return on CET1 capital (RoCET1) of at least 30% over the cycle. These targets are not just aspirational—they're grounded in a track record of overdelivering on cost savings.

Take its current cost-saving program: the bank aims to slash CHF 130 million in expenses by 2028, with a 50% cost-to-achieve ratio. This builds on an extended CHF 110 million savings target from its 2023–2025 program, which it already expects to exceed by CHF 20 million. Such discipline suggests Julius Baer can navigate its next phase with confidence.

Why Core Markets Matter: Exit Non-Core, Double Down on Strengths

The firm's geographic pivot is equally critical. It is exiting non-core markets like Brazil's onshore operations while doubling down on high-potential regions such as Italy, where it is launching an onshore wealth management platform. This sharp focus aligns with its high-net-worth (HNW) and ultra-HNW (UHNW) client strategy, supported by a new UHNW Competence Centre and a Global Products & Solutions unit.

The result? A streamlined footprint with fewer distractions. This refocus is already bearing fruit: Julius Baer's front-office productivity has improved, and its client retention rates remain strong, even as peers struggle with attrition.

Valuation: A Discounted Gem in a Premium World

At 1.2x book value, Julius Baer trades at a steep discount to its Swiss peers like Credit Suisse (1.8x) and UBS (1.5x). This undervaluation is puzzling given its strong capital ratios (CET1 above 11%, Total Capital >15%) and the structural advantages of its strategy.

The disconnect suggests the market has yet to price in the full potential of its 2026–2028 targets. If Julius Baer meets its RoCET1 goal of 30%, its earnings could surge, narrowing the gap to peers.

Risks: Economic Downturns and Regulatory Hurdles

No investment is without risk. A prolonged economic slump could crimp net new money growth and client activity. Additionally, Julius Baer's deferred share buyback plans—pending regulatory clarity from FINMA on legacy credit issues—add uncertainty.

Yet these risks are manageable. Julius Baer's strengthened risk culture, led by new Chief Risk Officer Ivan Ivanic, reduces the likelihood of repeat past missteps. Meanwhile, its CHF 14 billion in liquidity reserves provide a buffer against volatility.

The Case for Immediate Action: A 2026 Target of CHF 14–16

The math is compelling. Assuming Julius Baer meets its 2028 targets and its valuation multiple expands to 1.4x book (still below peers' averages), its stock could rise to CHF 14–16 per share by year-end 2026—a 30–40% upside from current levels.

Add in its dividend yield of 5% (sustainable under its conservative capital policy) and the strategic clarity under CEO Stefan Bollinger, and the case for buying now becomes irrefutable.

Final Analysis: A Turnaround Story Worth Betting On

Julius Baer is no longer the underperformer of yesteryears. Its cost discipline, strategic exits/entrances, and client-centric reforms have positioned it to capitalize on a maturing wealth management landscape. With peers like Credit Suisse still recovering from crises, Julius Baer's focus on execution and value creation stands out.

The stock's undervaluation relative to peers, coupled with its clear path to achieving 2026–2028 targets, makes it a buy today. Holders could be handsomely rewarded as the market catches up to this Swiss banking underdog's transformation.

Investment Decision: Buy Julius Baer (BAER) at current levels; target CHF 14–16 by end-2026.

This analysis assumes no significant shifts in market conditions or regulatory outcomes. Always conduct further research before making investment decisions.