Financial Results
UBS's Wealth Businesses Report Rise In Q1 Profits; Group Result Falls

The Swiss banking house reported stronger results for its wealth management businesses in the first three months of this year.
UBS today reported that
its wealth management business (excluding Americas) delivered an
adjusted profit before tax of SFr636 million ($669 million), a
rise of SFr131 million from the prior quarter, despite the lowest
transaction volumes recorded for a first quarter, and reflecting
lower net expenses for provisions for litigation, regulatory and
similar matters. For the entire firm, net profit attributable to
shareholders fell, however. Shares in UBS fell 6.35 per cent
mid-morning in London at SFr15.48 per share.
The Zurich-listed lender said this business division attracted
"very strong" net new money of SFr15.5 billion, driven by net
inflows from all regions, particularly Asia-Pacific, and the
ultra high net worth segment. The adjusted net margin on invested
assets increased by five basis points to 27 basis points. During
the reporting period, UBS opened a new Shanghai branch as part of
its onshore expansion in China.
Wealth Management Americas, meanwhile, recorded an
adjusted profit before tax of $245 million compared with $63
million in the previous quarter, reflecting lower net expenses
for provisions for litigation, regulatory and similar
matters.
This business segment logged net new money of $13.6 billion; this
reflected net inflows predominantly from newly recruited advisors
as well as from financial advisors employed with UBS for more
than one year. WMA financial advisors continued to be the most
productive among peers with an average $147 million of invested
assets and $1.1 million revenue per advisor, it said.
"Negative market performance, substantial volatility, as well as
underlying macroeconomic and geopolitical uncertainty, led to
more pronounced client risk aversion and abnormally low
transaction volumes in the first quarter," the bank said.
"Some of these factors have stabilised recently, but the
underlying macroeconomic challenges and geopolitical risks
highlighted previously continue to contribute to client risk
aversion and are unlikely to be resolved in the foreseeable
future. Low interest rates, and the relative strength of the
Swiss franc, particularly against the euro, continue to present
headwinds," it added.
Separately, and confirming some media reports, the bank has set
out plans to restructure its wealth management division.
A note sent to staff talks of the creation of new division and
leaner operations. A report in the Financial Times quotes wealth
management CEO Juerg Zeltner as saying: “What is good enough
today is not going to be good enough tomorrow."
Zeltner said reducing complexity will lead to “some reduction in
personnel, predominantly in non-client facing areas”. Annual cost
savings will be “hundreds of millions”, the report added.
Other segments
Personal and corporate banking posted an adjusted profit
before tax of SFr422 million compared with SFr396 million in the
prior quarter, despite continued challenges arising from negative
interest rates and the slowdown in economic activity. The
annualised net new business volume growth rate for the personal
banking business increased to 4.9 per cent from 0.6 per cent, the
highest growth rate since the first quarter of 2012.
Asset management delivered an adjusted profit before tax of
SFr110 million, down from SFr153 million in the prior quarter,
partly due to lower performance fees in equities, multi
asset and other areas. Excluding money market flows, net new
money outflows were SFr5.9 billion including a SFr7.2 billion
pricing-related outflow from one client, and SFr3.8 billion of
outflows driven by client liquidity needs, both from lower-margin
passive products.
The investment bank posted an adjusted profit before tax of
SFr370 million compared with SFr223 million in the prior quarter,
maintaining prudent risk, cost and resource management. The
investment bank's fully applied risk-weighted assets (RWA) were
stable at SFr63 billion.
Group peformance
In what it called a "challenging environment", UBS said that
across all divisions, it reported an adjusted operating profit
before tax of SFr1.366 billion, with positive contributions from
all business divisions and regions. Net profit attributable to
shareholders was SFr707 million, falling from SFr1.977 billion a
year earlier. Group annualised adjusted return on tangible
equity was 8.5 per cent. UBS's combined wealth management
businesses attracted strong net new money totalling SFr29
billion, the highest since 2008.
The bank had a fully applied CET1 capital ratio of 14.0 per cent.