Record Profits and Asset Inflows at UBS Wealth Management

Paul Adams

4 May 2007

At UBS, Global Wealth Management & Business Banking's pre-tax profit was a record SFr 2,244 million in first quarter 2007, an increase of 3 per cent from fourth quarter 2006. And net new money was at an all-time high of SFr52.8 billion, with SFr44.8 billion inflow from wealth management businesses worldwide. In the International and Swiss wealth management businesses, pre-tax profit rose 6 per cent to a record SFr 1,501 million in first quarter 2007. Total operating income increased 9 per cent, with recurring income buoyed by the higher asset base, according to a statement from the bank. Non-recurring income, up 19 per cent, benefitted from significantly higher client activity. Operating expenses rose 12 per cent, reflecting rising personnel expenses, which were up due to higher performance-related accruals, new staff hires and increased costs for the employee pension plan in Switzerland. General and administrative expenses fell slightly on the release of previously made provisions. In the US wealth management business, pre-tax profit was SFr171 million in first quarter 2007, down 2 per cent from SFr174 million in fourth quarter 2006. In US dollar terms, pre-tax profit fell 3 per cent. Total operating income rose slightly, reflecting a record level of recurring income due to rising managed account fees. This was partly offset by lower non-recurring revenue, which fell mainly on lower performance fees in first quarter 2007. In US dollar terms, operating income was 1 per cent higher than in the fourth quarter. In first quarter 2007, total operating expenses rose marginally. Personnel expenses rose 9 per cent, a result of increased performance-related compensation, higher salary costs due to the integration of personnel from McDonald Investments, and the hiring of additional non-financial advisor staff for growth initiatives. Non-personnel expenses, which include general and administrative, depreciation and amortisation expenses, decreased, mainly as a result of lower legal provisions.