UBS is braced for a beating from strong Swiss franc and low rates

 
Tim Wallace
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UBS’ PROFITS jumped at the end of 2014 as its investment banking arm returned to health, the Swiss giant reported yesterday.

But the lender’s shares fell as bosses warned the strong Swiss franc, combined with rock-bottom interest rates, will hit profits.

Group profits came in at 963m Swiss francs (£681m) for the fourth quarter, up 13 per cent on the same period of 2013.

Operating profits in its the investment banking arm swung back from a pre-tax loss of SFr1.3bn in the final quarter of 2013, to a profit of SFr367m at the end of 2014.

But profits in wealth management slid 8.6 per cent to SFr646m, and retail and corporate profits fell 21 per cent to SFr340m.

“The increased value of the Swiss franc relative to other currencies, especially the US dollar and the euro, and negative interest rates in the Eurozone and Switzerland will put pressure on our profitability and, if they persist, on some of our targeted performance levels,” chairman Axel Weber and chief executive Sergio Ermotti told shareholders.

The bosses also warned that a combination of chaos in the Eurozone, uncertainty on US policy, geopolitical instability and volatility in commodities prices may conspire to hurt profits.