UBS saw its profit surge by 40 per cent year-on-year during the first quarter, but the investment bank is bracing itself for hits from the coronavirus pandemic.
The group posted a net profit attributable to shareholders of US$1.6 billion ($2.4 billion) for the first quarter, up 40 per cent from its previous corresponding period result of US$1.1 billion ($1.6 billion).
UBS’ operating profit before tax came to US$2 billion ($3 billion), increasing by 30 per cent year-on-year.
The global wealth management and asset management businesses had contributed to the profit swell, but the investment bank was the strongest performer, with its profit before tax rising by 242 per cent to $709 million ($1 billion).
The impact of COVID-19 had seen a buzz in client activity levels: global markets revenue increased by 44 per cent due to “significantly higher volumes and volatility” particularly across foreign exchange, rates and cash equities revenues.
Looking ahead through the coronavirus pandemic however, UBS stated “the range of possible outcomes remains very wide” and it is too early to make reliable predictions about any economic recovery.
It is anticipating lower asset prices to reduce its recurring fee income, alongside lower interest rates, which present a headwind to net interest income. UBS also expects client activity levels will decrease, affecting its transaction-based income.
During the first quarter, global banking revenue rose by 44 per cent, reflecting a closing of a number of transactions in the advisory segment and higher equity capital markets revenues.
The global wealth management segment generated an operating profit before tax of US$1.2 billion ($1.8 billion), surging by 41 per cent from the previous year.
UBS cited higher client engagement for leading to a 46 improvement in transaction-based income, while net interest income was up 2 per cent on higher lending revenues.
The asset management division managed a 52 per cent rise, up to US$157 million ($240.9 billion), with operating income up by 15 per cent. The division saw higher management and performance fees – the latter increased by US$9 million ($13.8 million). Invested assets had decreased quarter-on-quarter, despite net new money of US$33 billion ($50.6 billion).
Global banking had risen by 44 per cent, reflecting the closing of a number of transactions in the advisory business, as well as higher equity capital markets revenues.
Meanwhile the personal and corporate banking business saw a 14 per cent drop in profit, to US$334 million ($512.5 million).
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].
Westpac’s settlement with AUSTRAC and its $1.3 billion penalty will play into the process for a shareholder class action against the bank,...