European Banks Daily

Research evidence excerpt

European Banks Daily

ever, ii.) the expectation that the

impact of implementing the risk and compliance framework will persist into 2027 means net new

money would continue to be tracked as a period-by-period metric. Net new money for wealth

managers can be inherently lumpy even without any change in the risk framework, but for BAER

it becomes harder to forecast with a high degree of certainty; and iii.) RM numbers have declined

on a net basis in 1H 26 (50 RMs onboarded and 64 RMs departed), with an expectation of a slight

net increase YoY by year-end 2026, hence we believe a material pickup in future flows would

also need increased contributions from seasoned advisors. Overall, the comments around risk

framework lead us to lower our 2026 Net new money forecast modestly to CHF 11.4bn or 2.2%

annualised vs. 2.3% annualised previously and our 2027 net new money forecast to CHF 15bn

or 2.7% annualised vs. 3.6% annualised previously. We forecast 4.1% in Net new money in

2028E, i.e. getting to the lower end of the 4-5% target range, which BAER reiterated for 2028.

We also note that 1H 26 Gross Margins were helped by the higher client activity levels and BAER

was able to participate in this upside, so while we expect a normalization in activity levels going

forward, the ability to participate in the revenue upside within a lower risk framework does give

us some degree of confidence that the steps being taken by management are moving the franchise

in the right direction. BAER is trading at 11.9x P/E 2027E, offering 4.1% dividend yield, we

remain OW with a new Dec-27 SOP-based PT of CHF 80 (from CHF 79 previously) driven by

the EPS upgrades.

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Mehmet Sevim (971) 4428-1784