UBS’ full-year net profit for 2019 came to $6.2 billion (US$4.3 billion), down by 5 per cent from the previous year, with the group falling short of its annual returns target.
The Swiss multinational saw its fourth quarter net profit come to $1 billlion (US$722 million), more than doubling from a year before when it had generated $416 million (US$315 million).
However, the group’s net profit fell by 32 per cent from the prior quarter.
It also failed to reach its previous goal of managing 15 per cent return on common equity tier 1 (CET1) capital, instead generating 12.4 per cent for the year.
Further, UBS hit a cost-income ratio of 78.9 per cent, in contrast to its previous target for 2019 of 77 per cent.
As a result, UBS has adjusted its guidance for the next years, projecting a return on CET1 capital of 12-15 per cent and a cost-income ratio of 75-78 per cent through 2022, contrasting to its previous expectation of a 2021 return on CET1 capital of 17 per cent and a cost-income ratio of 72 per cent.
Operating income fell by 5 per cent to $42 billion (US$28.8 billion), year-on-year. Diluted earnings per share were $1.66 (US$1.14), down 3 per cent year-on-year.
Profit fell across each region UBS covers – in the Asia Pacific, profit before tax was down 20 per cent from the year prior, to $1.7 billion (US$1.2 billion). Operating income in the APAC area fell by 5 per cent to $6.8 billion (US$4.7 billion).
The UBS investment bank was the segment which suffered the most, down 37 per cent year-on-year with its profit before tax of $1.5 billion (US$1.06 billion).
UBS cited challenging market conditions, particularly in the first quarter of 2019, as the cause of downward pressure on the division’s revenue.
The asset management business reported its invested assets rose to a record $1.3 trillion (US$903 billion), with its profit before tax rising 17 per cent from the pcp to US$565 million.
Net new money inflows into asset management, excluding money markets, were $18.4 billion (US$12.6 billion).
Meanwhile the global wealth management business saw its profit before tax rise by 4 per cent year-on-year to $4.9 billion (US$3.4 billion) – although recurring net fee income had decreased.
UBS noted it had restructured the segment, with a shift in its product mix forcing margin pressure and declining net fee income.
Net interest income in the segment was reduced by 4 per cent while transaction-based income grew by 26 per cent. Operating income only inched forward by 1 per cent year-on-year, to $5.9 billion (US$4.1 billion).
But invested assets by the end of the period were at $3.7 billion (US$2.6 billion), up from $3.2 billion (US$2.2 billion) in Q4 2018.
UBS’ personal and corporate banking division saw its profit before tax rise to $2.1 billion, up 3 per cent year-on-year.
UBS also alerted the market it would be selling its majority stake in its B2B fund distribution polatform, UBS Foncenter, to Clearstream, Deutsche Börse Group’s post-trade services provider.
The group is aiming to record a post-tax gain of around $906.5 million (US$600 million) and an increase in CET1 capital of around $604.3 million (US$400 million).
UBS will retain a minority stake, and will keep an agreement where it may sell its remaining holding to Clearstream later on.
UBS Fondcenter will be combined with Clearstream’s Fund Desk, with the amalgamated platform to have a presence in Europe, Switzerland and Asia.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].