SWISS bank UBS reported higher profits for the first quarter yesterday, as cost cutting and a new focus on wealth management paid off.
Profits came in at SFr1.05bn (£707m) in the three-month period, up 6.9 per cent on with the same period of 2013.
However, revenues disappointed, with operating income down 6.6 per cent to SFr7.26bn. Profits increased only as operating expenses fell more quickly, down 7.3 per cent to SFr5.87bn.
The worst hit unit was investment banking, where operating profits dived 40.8 per cent on the year to SFr549m.
Within that, the bank joined the industry-wide route in bond trading – its foreign exchange, rates and credit arm saw revenues fall 38 per cent on the year to SFr382m.
Wealth management profits slipped 4.5 per cent, to SFr659m, while global asset management profits fell 21.3 per cent to SFr126m.
But UBS’s retail and corporate banking arm saw a resurgence, with profits up 10.8 per cent to SFr401m.
The bank pledged to increase its cost-cutting plan, pledging to cut another five percentage points from its cost to income ratios in wealth and asset management. Currently the ratio stands at 81.1 per cent for the group, down from 81.2 per cent a year ago.
It is targetting a return on equity of 15 per cent, compared with 10.2 per cent now and 10.1 per cent a year ago.
JP Morgan analyst Kian Abouhossein said: “The update should reassure investors on the long-term strategy of the bank and confirm its path towards becoming a cashflow giant with material payout potential.”
The bank’s shares rose 0.27 per cent on the day.