BofA Securities upgraded Julius Baer Gruppe AG to a "buy" rating from "neutral" on Tuesday, following a 7% decline in the Swiss private bank’s shares after the firm published a four-month interim management statement. At the time BofA issued its note, the shares were trading at CHF63.38 and the bank set a price objective of CHF70.
Early trading showed a rebound in the stock, which was up 4.1% at 06:23 ET (10:23 GMT) after the upgrade. The analysts behind the call pointed to three core drivers for the upgrade: improving operating leverage, a recovery in net new money, and the presence of excess capital on the balance sheet.
Operational and earnings outlook
BofA projects a compound annual growth rate in earnings per share of 17% from 2025 to 2028, with EPS rising to CHF6.92 in 2028 from CHF4.27 in 2025. The broker anticipates that this earnings trajectory will be supported in part by share buybacks totaling CHF1.40 billion over three years, which BofA states is equivalent to roughly 11% of Julius Baer’s market capitalization.
Net new money growth for the firm was reported at an annualized 1.7% for the January through April 2026 period, a pace that fell short of expectations. BofA attributed the weak start to a set of temporary pressures, including macro headwinds in the Middle East - a region that accounts for 11% of Julius Baer’s assets under management - client de-risking under a new compliance framework, and a pause in client re-leveraging.
BofA’s rate assumptions show a trough at 2.6% for full-year 2026, followed by a recovery to 3.5% in 2027 and 4.3% in 2028, the latter reaching the upper end of the bank’s 4%-5% target range.
Assets under management and revenue
Assets under management stood at CHF521 billion at the end of 2025. BofA’s projections put AUM at CHF557.10 billion by the end of 2026 and at CHF641.30 billion by the end of 2028. Total revenue is forecast to rise from CHF4.49 billion in 2026 to CHF4.98 billion in 2028.
On efficiency, BofA expects the cost-to-income ratio to improve to 65.8% in 2026 from 71.3% in 2025, moving toward Julius Baer’s stated target of below 67%.
Capital position and buyback plans
Julius Baer’s Common Equity Tier 1 (CET1) ratio reached 18.1% at end-April 2026, up 70 basis points from 17.4% at end-2025. That level sits comfortably above the bank’s own buyback floor of 14%. BofA estimates roughly CHF1 billion of excess capital above that floor.
The broker expects buybacks to restart in the second half of 2026 at CHF300 million, rising to CHF550 million per year in both 2027 and 2028. Under those assumptions, the bank’s total payout ratio would exceed 90%, well above a cited European bank average of approximately 70%, and equate to an annual total yield of about 9%.
"Once they resume, we estimate >90% payout including dividends for 9% total yield pa," the note stated.
Revisions, valuation and catalyst
BofA raised its 2026 EPS estimate by 4.4% to CHF5.88 from CHF5.64, reflecting a stronger gross margin in the January-April period equivalent to 90 basis points. The 2027 and 2028 EPS estimates were trimmed by 1.1% and 2% to CHF6.11 and CHF6.92 respectively, on lower reported assets under management, with higher buyback assumptions partly offsetting the reductions.
The broker lowered its price objective marginally to CHF70 from CHF71. On valuation, BofA placed the stock at roughly 10 times its 2027 estimated price-to-earnings ratio, below a long-term average of 11 times.
Finally, BofA identified a positive resolution to an investigation by the Swiss Financial Market Supervisory Authority as a key catalyst to unlocking the buyback program, noting that such an outcome is expected in the third quarter of 2026.
Bottom line
BofA’s upgrade to buy reflects a combination of projected earnings growth, a clear pathway to resumed and then expanded buybacks supported by excess capital, and improving operating metrics. Short-term franchise-level headwinds and a disappointing start to net new-money flows tempered part of the outlook, but the broker’s forecast expects AUM and revenue growth to recover through 2028 under its rate and capital assumptions.