UBS Wealth Management delivered the highest levels of quarterly net new money since 2007, and the highest quarterly profit since 2009.
The United Bank of Switzerland has posted a better than expected performance for the first quarter of the year on April 30th. The bank has posted a profit of 7.8 billion CHF, ($ 8.3 billion) in net revenues for the period, its highest since Q1, 2011. Its equity trading unit and wealth management business has done commendable business. The shares of the bank have increased by 6 % over trading following the earnings announcement. This is definitely good news for the bank which had lost nearly CHF 1.9 billion in the last quarter of 2012.
The figures definitely put to rest doubts among the investors about the financial worthiness of the bank, which has been forced to rework on its business model in the wake of a $1.5 billion fine imposed by the London Interbank Offered Rate (LIBOR). LIBOR is set by 16 international member banks and by some estimates, places rates on a staggering $ 360 trillion of financial products across the globe. LIBOR is the rate at which world’s most preferred borrowers are able to borrow money. It is also the rate at which rates for less preferred borrowers are based. Countries that rely on the LIBOR for a reference rate include the United States, Canada, Switzerland and the United Kingdom. The bank had to work frantically over the latter half of 2012, to shore up its balance sheet to comply with the world’s most stringent capital requirement rules. When UBS announced the decision of reducing its fixed income business by enforcing huge job cuts, it gave raise to debates about the profitability of its overall investment banking business over the coming years. Its focus on equity trading meant that the unit would have to perform better, and more consistently in the future. The bank has not let down the expectations by registering a handsome growth in the first quarter of 2013. The equities trading desk generated an amount of CHF 1.2 billion ($ 1.3 billion) in revenues, mainly aided by the rallies in equity markets around the globe. The bank has also forged ahead by cutting costs, allowing the investment banking division to rake in pre-tax incomes of CHF 1 billion.
The bank’s wealth management unit had not been doing well in the last few quarters. However, the first quarter of 2013 has seen the bank generating lot of income with the Swiss and International Wealth Management Unit generating nearly 10% of more income in 2013 compared to the last quarters. The America’s wealth management unit also posted a better performance compared to the previous quarter where the revenues, the pre-tax income of the last quarter increased by 16%. This growth stems from the fact that the UBS’s wealth management assets have seen a steady growth over the period. The size of invested assets increased by 6 % sequentially for both the Swiss International wealth management unit and America’s wealth management unit, registering a total profit of CHF 870 billion ($ 930 billion) and & 891 billion respectively. This growth is expected to grow further due its focus on wealth management in general and asset management in particular.