UBS CEO says investors may be expecting too much
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[May 03, 2018]
ZURICH (Reuters) - UBS Group <UBSG.S>
Chief Executive Sergio Ermotti warned on Thursday that investors may be
expecting too much too soon from Switzerland's biggest bank, noting
heavy spending on technology would weigh on results in the short term.
"I have said this before –- we cannot, unfortunately, simply multiply
the first-quarter result by four," he said in remarks prepared for the
bank's annual meeting in Basel after the world's biggest wealth manager
boosted first-quarter net profit by nearly a fifth.
"While the macroeconomic environment may have improved somewhat, the
geopolitical position remains difficult. And the interest rate situation
-- particularly in Switzerland and Europe -- continues to be a
challenge," he said.
"As with many of our U.S. competitors, the market may have too high
short-term expectations."
UBS shares were 0.3 percent higher by midday. They have fallen more than
7 percent this year, lagging a 3 percent decline in the Stoxx European
bank sector index <.SX7P>.
Ermotti said UBS was investing heavily in digital infrastructure and
spending more than 10 percent of revenue –
or more than 3 billion Swiss francs ($3.01 billion)per year – on
technology.
"This makes us more efficient and allows us to further develop our
offering. All this, of course, has a short-term effect on our results,"
he said.
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CEO Sergio Ermotti of Swiss bank UBS speaks at the annual news
conference in Zurich, Switzerland January 22, 2018. REUTERS/Arnd
Wiegmann
The challenge was finding a balance between growing its business and investing
in the future.
"But we also want to continue to increase the returns for our shareholders. We
want to pay out an ordinary dividend that increases by a middle to high
single-digit percentage every year," he said, while returning additional capital
primarily through share buybacks which began last week.
He said priorities for 2018 included becoming more profitable in the global
wealth management business, maintaining its leading position in this area and
continuing to increase profits in other businesses, and capturing growth
opportunities, "especially in Asia and the Americas" while reinforcing its
leading position in Switzerland.
($1 = 0.9963 Swiss francs)
(Reporting by Angelika Gruber and Michael Shields, editing by John Revill)
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