|
 Switzerland's biggest bank and the world's largest wealth manager
slimmed down its investment bank and focused more on managing the
money of the world's wealthy, traditionally a more stable business,
following the financial crisis.
However, even this was not immune to rocky markets at the start of
2016, which led to many banks posting sharp revenue drops as clients
traded and invested less.
"Overall, UBS reported a weak quarter across most segments, mainly
driven by lower revenues," Vontobel analyst Andreas Venditti, who
rates the stock "buy", wrote.
UBS said on Tuesday net profit for the first three months of 2016
fell by 64 percent to 707 million Swiss francs ($741.2 million).
Although this was roughly in line with the average estimate of 704
million francs in a Reuters poll of five analysts, it was down from
1.98 billion francs in the same quarter last year, and the bank's
shares fell 7.6 percent by 1014 GMT (0614 EDT), underperforming
other European banks.
The profit drop was exacerbated by the year-earlier comparison
period being unusually strong - UBS booked its biggest quarterly
profit in nearly five years in first-quarter 2015 in part thanks to
a surge in foreign exchange dealing after the Swiss National Bank
axed its currency cap.
UBS's common equity tier 1 capital ratio, which UBS has set as a
benchmark for its dividend, was 14 percent, down from 14.5 percent
at the end of 2015.
It aims to return at least half its profits to shareholders if it
maintains capital reserves equal to at least 13 percent of
risk-weighted assets under global rules, and 10 percent when
applying its own stress tests.
WEALTH MANAGEMENT CUTS
UBS also told staff it was looking to cut costs in wealth
management, which posted adjusted first-quarter pre-tax profit of
636 million francs, down from 856 million francs a year ago.
[to top of second column] |
"We believe the outlook remains challenging," Juerg Zeltner, who
heads wealth management, told staff in a memo seen by Reuters and
confirmed by the bank.
The savings will come through a streamlining of the division's back
office and are part of UBS's previously announced efforts to bring
down costs by 2.1 billion francs by the end of 2017.
An unexpected positive in the results was the 29 billion francs in
net new money from UBS's two private banking businesses, the highest
such figure for a first quarter since 2008 and well above a poll
forecast.
The measure is viewed as an important indicator for future revenue
in wealth management. A net outflow of client assets at the end of
2015, largely due to withdrawals from Europe and some emerging
markets, had raised some concerns.
Nevertheless, UBS struck a cautious tone, saying "underlying
macroeconomic challenges and geopolitical risks" were making its
clients risk averse and this was unlikely to change soon.
($1 = 0.9539 Swiss francs)
(Reporting by Joshua Franklin; Editing by Kenneth Maxwell and
Alexander Smith)
[© 2016 Thomson Reuters. All rights
reserved.] Copyright 2016 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
 |
