UBS profits plunge
(3 May 2016 – Switzerland) Global investment bank, UBS Group has reported a 64 percent slide in first-quarter profits.
Net income fell 64 percent to 707 million Swiss francs (A$990 million) from a year earlier.
Since his appointment in 2011, chief executive, Sergio Ermotti has sought to reduce costs via thousands of job cuts and scaling back unprofitable operations including rates and credit businesses to focus on wealth management.
According the results statement, UBS is on track to cut costs by 1.4 billion francs by the end of June under a plan announced in 2014, as part of efforts to lower expenses by 2.1 billion francs in 2017.
The bank’s revenue dipped by nearly a quarter to 6.8 billion francs in the first quarter, while the adjusted return on tangible equity dropped to 8.5 per cent from 14.4 per cent.
Ermotti said the bank maintains its profitability target of 15 per cent for 2017 and will be "in a better position" to update markets at the end of June.
"This cocktail of macro issues, geopolitical issues is now coming on," the CEO told reporters.
"You see a lot of factors that may affect market sentiment, and in that sense you might see volatility, but it's not the kind of volatility that is translating to client activity. It's a paralysing volatility."
The investment bank has experienced its lowest first quarter since 2009, with profit dropping 67 per cent to 253 million francs. The bank’s “corporate client solutions” division had a decline in revenues of 39 percent to 474 million francs.
"We definitely entered into a kind of new territory in the first quarter," Ermotti said. "The first quarter was an environment that had only one constant -- risk aversion from January 1 until the end of the quarter."
The wealth management division pretax profit was down to 557 million francs, from 951 million francs at the same time in 2015.
UBS’s CET1 ratio dropped to 14 percent at the end of the first quarter, from 14.5 per cent three months previously, following an increase in risk-weighted assets.
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