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UBS' Americas Unit Chalks Up Record Quarterly Pre-Tax Profit
Tom Burroughes
2 May 2012
Quarterly pre-tax profits rose sharply at
the wealth management business ofUBS, with the Americas side of the operation
chalking up the highest-ever reported quarterly profit for the first three
months of the year. Switzerland’s largest bank said wealth management
pre-tax profit was SFr803 million ($1.3 billion) in the first quarter of 2012
compared with SFr471 million in the previous quarter, and included a reduction
in personnel expenses of SFr237 million related to changes to its Swiss pension
plan. Adjusted for this item and restructuring charges, pre-tax profit
increased by SFr110 million to SFr578 million. In the Americas business of UBS, meanwhile,
the division achieved its highest reported quarterly pre-tax profit of $209
million in the first quarter of 2012 compared with $156 million in the prior
quarter. “The quarter was marked by higher transactional activity and included
higher realized gains on sales of financial investments in the
available-for-sale,” it said. Across the whole of UBS, meanwhile,
first-quarter net profit attributable to UBS shareholders was SFr827 million in
the first quarter of 2012 compared with SFr319 million in the fourth quarter of
2011. The bank had a Basel 2.5 Tier 1 ratio of
18.7 per cent. The results, which showed the Americas' business had a pre-tax margin of almost 13 per cent, are the best since this business was acquired by UBS back in 2000 (the old PaineWebber business), according to Christoper Wheeler, analyst at Mediobanca in London. Momentum The results were issued a few days after one of UBS’s top wealth
management bosses told this publication that the firm now has “forward momentum” and is recovering
strongly from a number of blows suffered in the aftermath of the 2008 financial
crisis. For wealth management (excluding the
Americas), UBS said total operating income increased by SFr96 million to
SFr1.769 billion from SF1.673 million, mainly due to higher net fee and
commission income, reflecting higher client activity levels from very low
levels seen in the previous quarter. The annualized net new money growth rate
was 3.6 per cent compared with 1.7 per cent in the previous quarter, it said.
Net new money was SFr6.7 billion, compared with SFr3.1 billion, due to strong
inflows in Asia-Pacific, emerging markets and wealth management in Switzerland,
as well as globally from ultra high net worth clients. The gross margin on invested assets
increased by 2 basis points to 93 basis points, mostly reflecting an
improvement in client activity levels. Invested assets were SFr772 billion on
31 March, up by SFr22 billion from 31 December 2011. Americas In the Americas wealth business, operating
income rose by $64 million to $1.568 billion from $1.504 billion. Annualized net new money growth for the
first quarter was 2.4 per cent, compared with 1.2 per cent in the fourth
quarter. Net new money rose to $4.6 billion from $2.1 billion. Net recruiting
of financial advisors contributed most of the inflows last quarter, while
financial advisors employed with UBS for more than one year contributed to a
lesser extent. In US dollar terms, the gross margin on
invested assets decreased by 2 basis points to 80 basis points. A 4 per cent
increase in income was outpaced by a 6 per cent increase in average invested
assets.