UBS focuses on wealth as its profits plunge
INVESTORS drove up UBS’s shares yesterday amid signs that it is successfully carrying out its strategy to focus on wealth management and scale back its investment bank.
The bank’s first quarter results showed a 42 per cent drop in pre-tax profits to SFr1.3bn (£879.6m), but analysts said that the underlying results showed “resilience during aggressive de-risking”.
It saw inflows of SFr10.9bn in assets under management during the first quarter of this year, much of it in the US, bringing the total wealth it manages to SFr1.5 trillion and generating a quarterly pre-tax profit of SFr803m.
Revenues at its investment bank bounced back from the last quarter of last year in a similar trend to the recovery seen in many of its rivals.
But at SFr2.9bn they were still significantly below the SFr3.5bn it brought in during the strong first quarter of last year.
Fixed income trading drove much of the improvement versus the end of last year, however, with revenues rising from SFr1bn to SFr1.5bn.
The bank said it was “successfully implementing our strategy” and was on track with its targeted annual cost-savings of SFr2bn.
It has also been deleveraging quickly, ditching SFr21bn of risk-weighted assets in its investment bank and bringing its Basel III core tier one capital ratio up to 11.8 per cent.
That puts the bank’s capital buffers well above the minimum that will begin to be imposed from next year.