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Pre-Tax Profit Dips At UBS Wealth Arm, Operating Income Rises

Tom Burroughes

27 April 2022

UBS yesterday reported that its global wealth management pre-tax profit for the first three months of 2022 dipped to $1.31 billion from $1.409 billion a year earlier, although it rose sharply from $563 million in the final three months of last year.

Operating income for Q1 2022 was $4.912 billion, rising from $4.848 billion a year earlier; total costs in the latest quarter were $3.602 billion, against $3.439 billion a year earlier, the Zurich-listed banking group, which operates in multiple regions, said.

Recurring net fee income increased by 7 per cent year-on-year, primarily driven by net new fee-generating assets and positive market performance. Net interest income increased by 14 per cent, mainly driven by deposit revenues, resulting from increases in deposit volumes and margins, as well as higher loan revenues, reflecting an increase in loan volumes.

Transaction-based income, however, fell by 19 per cent, mainly driven by lower client activity, particularly in Asia-Pacific. Net credit loss releases were $7 million, compared with net credit loss releases of $3m in 1Q21.

The wealth management arm’s cost/income ratio was 73.4 per cent, up 2.5 percentage points from a year before, as operating cost rises outpaced income growth.

This process was driven by higher financial advisor compensation, provisions for litigation, and restructuring costs, UBS said.

Invested assets fell to $3.145 trillion, as markets fell from the start of this year. Fee-generating assets fell to $1.414 trillion.

Net new fee-generating assets were $19.4 billion, representing an annualised growth rate of 5 per cent in the quarter, UBS said.

For the overall UBS group, first-quarter pre-tax profit stood at $2.73 billion, rising 19 per cent on a year earlier. That figure included net credit loss costs of $18 million. The bank’s cost/income ratio narrowed to 70.7 per cent. Operating income rose 8 per cent on a year earlier, and costs rose 4 per cent over the same period. 

Net profit attributable to shareholders was $2.136 billion, up 17 per cent on a year ago.

At the end of March, the Common Equity Tier 1 capital ratio – a standard international measure of a bank’s capital buffer – was 14.3 per cent. The bank repurchased $1.7 billion of shares in 1Q22, and it plans to buy back around $5 billion of shares during 2022.