UBS profit gets boost from trading uptick
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2 min read . Updated: 26 Apr 2022, 06:21 PM IST - Switzerland’s biggest bank by assets said net profit in the first quarter rose 17% to $2.14 billion
UBS Group AG said it is in good shape to navigate geopolitical uncertainties and is benefiting from more client trading in its investment bank.
Switzerland’s biggest bank by assets said the uptick in trading stocks and other assets lifted net profit in the first quarter, even as its main wealth management business slowed down. Net profit in the quarter was $2.14 billion, up 17% from $1.82 billion in the first quarter of 2021 when UBS took losses exiting stock positions of family office Archegos Capital Management.
Wealth management profit before tax was $1.31 billion, down from $1.41 billion in the year-ago period because of higher costs and lower transaction fees from clients, particularly in Asia. UBS’s investment bank made a $929 million pretax profit, compared with $412 million in pretax profit in the first quarter of 2021, when Archegos more than halved the unit’s profit.
UBS said it is on track to buy back $5 billion in the shares this year, and repurchased $1.7 billion worth of shares in the first quarter. Its shares rose 2.5% Tuesday and are slightly positive for the year while many other bank stocks are down.
Chief Executive Ralph Hamers said UBS’s stability and strong internal controls have helped to attract clients, including $19.4 billion in net new fee-generating assets in the quarter. He said more than 100,000 customers and prospects flocked to UBS webinars and research in recent weeks to learn more about the market impact of Russia’s invasion of Ukraine and rising inflation.
UBS’s costs rose in the U.S. and other countries from inflation and paying higher salaries, Mr. Hamers said. Low inflation in Switzerland, the base for much of its global operations, is helping the bank manage the rises, he said.
On Tuesday, the bank said its exposure to Russia was down to $400 million as of March 31 and that the figure includes trade finance business, cash accounts and derivatives, and a single loan in its investment bank. It said around 0.7% of $3.14 trillion invested assets in its wealth business have been affected by international sanctions on Russia.
UBS has been a favorite European stock pick for investors because of its base of around $4.4 trillion in assets it invests for the world’s rich. It is also Switzerland’s largest bank and a force in some areas on Wall Street and in Asian financial markets. Mr. Hamers has said the aspiration is for invested assets to rise above $6 trillion in the coming years, including by targeting a younger and less-rich clientele with digital advice.
In January, UBS agreed to buy online wealth adviser Wealthfront in the U.S. for $1.4 billion, giving it a platform to extend its investment advice. Mr. Hamers said the deal is in the process of closing.
Earlier this month, the bank added veteran Morgan Stanley banker Colm Kelleher as chairman, underlining its competitive ambitions to handle more Americans’ investment portfolios.
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This story has been published from a wire agency feed without modifications to the text