UBS reported significant inflows across the bank in the first quarter as customers sought the bank’s stability but its profit more than halved due to costs from legacy issues dating back 15 years.
In the first quarter, UBS saw $28bn of new money in global wealth management, of which $7bn came in the last ten days of March following the announcement of the Credit Suisse takeover. The asset management division also saw $14bn of new money.
“Our solid underlying performance and strong inflows this quarter demonstrate that we continue to be a source of stability for our clients during periods of significant uncertainty,” chief executive Sergio Ermotti said.
Despite the inflows, UBS reported a profit attributable to shareholders of $1bn which was less than half what it recorded in the same quarter last year.
This decrease was mainly a result of a $665m increase in provisions related to US residential mortgage securities litigation. The provisions pushed operating expenses up to $7.2bn from $6.6bn last year.
Ermotti said UBS is “making progress” towards resolving the issue, which dates back 15 years.
The results are UBS’ first since its state brokered acquisition of Credit Suisse for $3.25bn last month. The deal created a bank with a balance sheet twice the size of Switzerland’s GDP.
The former rivals were pressed into a merger by Swiss regulators after fears grew over the stability of Credit Suisse and the possible risks its collapse would pose to the global financial system.
Ermotti himself was brought back to UBS, replacing his short lived replacement Ralph Hamers, to handle the integration of its long-time rival.
UBS said it expects the takeover of Credit Suisse to offer significant opportunities, particularly in wealth management and in the Swiss domestic bank.
UBS confirmed it would “actively reduce the risk and resource consumption” of Credit Suisse’s investment bank. The deal is expected to be concluded in the second quarter of 2023.
“While acknowledging the magnitude of, and complexity associated with, the integration and restructuring of Credit Suisse, we believe that this combination presents a unique opportunity to bring significant, long-term value to all of our stakeholders,” the bank said.
In results published yesterday, Credit Suisse revealed it faced asset outflows of £55bn in the first quarter, warning that outflows had not yet reversed. The bank forecast a “substantial loss” for the full year.