ZURICH, Nov 22 (Reuters) - Shares of Swiss private bank Julius Baer (BAER.S) dropped nearly 5% in early trading on Monday after it said client activity had continued to slow during the year. The wealth manager, Switzerland"s third-largest listed bank, also said margins from brokerage commissions and from financial instruments had shrunk compared to the first half of 2021. Wealth managers enjoyed a boom during 2020 as lower consumption combined with an increase in disposable income from government transfers allowed households to save and invest more. Surging equity and housing prices also made some households wealthier. Gross margins in the first 10 months of 2021 of 82 basis points, down from 88 basis points a year earlier, reflected what Julius Baer described as a "softening" in client activity from "exceptionally" high levels the previous year. "The slowdown in client activity relative to the strong first quarter of 2021 continued from the second to the third quarter and well into October," the bank said in a statement. "Initial results for November, however, indicate a potential recovery for the final two months of the year," it added. Shares in the bank fell 4.6% in early trading in Zurich, with Vontobel analyst Andreas Venditti describing the statement as weaker than expected. "JB guides for a potential recovery in the last two months of the year. Still, we might have to lower our estimates slightly," Venditti said. Nonetheless, Julius Baer said - without giving a figure - that profitability had grown "significantly" during the first 10 months of 2021, due to strong growth in client assets and efficiencies, complemented by a near absence of credit losses. Assets under management increased 12% to 484 billion Swiss francs ($520.93 billion), driven by a 4.4% increase in net new money, as well as positive stock market performance and currency movements. ($1 = 0.9291 Swiss francs) Reporting by John Revill Editing by Riham Alkousaa, Paul Carrel, Kirsten Donovan