Tag: UBS

Switzerland’s largest bank UBS has weathered multiple first-quarter headwinds, turning its best first-quarter net profit in over a decade. UBS reported Tuesday a net profit of $2.1 billion in the first quarter, exceeding expectations, showing the bank was able to steer a course through several challenges in the first quarter and posted its best first-quarter results since 2007.

The result improved on the $1.3 billion reported for the fourth quarter of last year and was better than the $1.8 billion booked during the first three months of 2021.

Switzerland’s largest bank accomplished this in the face of the Ukraine war, inflation showing no signs of abating anytime soon, and central banks that are tightening the loose-money spigots. «Our strong results today speak to our ability to accomplish our objectives regardless of the backdrop,» said UBS CEO Ralph Hamers.

UBS said it reduced its Russia exposure early and actively and had a direct country exposure of $400 million as of March 31 of 2022. It expects a firm-wide P&L negative impact of $100 million.

The bank said it is not conducting any new business in Russia or with Russia-domiciled clients. However, it will continue to monitor settlement risk on certain transactions with Russian bank and non-bank counter parties, which might result in unexpected increases in exposures.

Pre-tax profit was $2.7 billion, improving by one billion dollars from the fourth quarter result of $1.7 and bettering the comparative year-ago quarter of $2.3 billion.

Earnings per share were $0.61 in the first quarter, up from $0.38 in the fourth quarter of last year and higher than the $0.49 reported during the first quarter of 2021, the results showed.

Global wealth management (GWM) booked a pre-tax profit of $1.3 billion, with the unit reporting net new fee-generating assets of $19 billion in the first quarter compared to 36.2 billion in the same year-ago quarter. Total fee-generating assets were $3.1 trillion As of the first quarter of last year, the GWM unit no longer reports net new money every quarter, and will only disclose the figure in its annual report.

Earlier this month, finews.com reported that 2021 was a bumper year for Swiss banks attracting new money inflows. But this year, wealth and asset managers are facing geopolitical and economic uncertainty resulting from the ongoing war in Ukraine and inflation showing no sign of abating anytime soon. Add to the mix central banks that are starting to close the taps of easy money flowing into financial markets.

The investment bank’s division’s 126 percent pre-tax profit growth from the comparative quarter was mainly attributable to Archegos-related losses in the same quarter last year. Excluding that loss, revenues increased by 4 percent, or just over $100 million, primarily from increased revenues in equity derivatives, rates, and foreign exchange.

While the path of economic growth has become much more uncertain, UBS expects growth in economic activity to continue, but increased uncertainty could continue to affect client activity levels and asset prices. However, even as central banks are tightening policy to arrest rising inflation, the banks said that rising interest rates, notably the US dollar, are expected to lead to higher net interest income.

Switzerland’s two major banks are usually cautious about rating each other’s shares. But right now, UBS sees little potential in its rival. Credit Suisse’s share continued to lose value and they are now trading just above 7 Swiss francs ($7.3) after it made a warning earlier this week that it would report a first-quarter loss. There is little to suggest that the stock will recover in the foreseeable future, especially after CEO Thomas Gottstein spoke of 2022 as a transition year. Now, many bank analysts seem to be chiming in with the same view.

British investment bank Barclays lowered its price target for Credit Suisse shares from 7.50 francs to 7.00 francs on Thursday, with their banking specialist, Amit Goel, rating the stock as underweight, which ultimately can be interpreted as a recommendation to sell.

UBS banking analyst Daniele Brupbacher was a little less harsh on his employers’ rival, giving Credit Suisse shares a twelve-month price target of CHF 7.40 and rating the stock as neutral earlier this week. So while not advising to sell, he is advising against buying it even at such a low price.

When the two major Swiss banks rate each other, they usually do so rather cautiously. Although they are ultimately competitors, they also play a decisive role in shaping the Swiss financial center. And no one is interested in having just one big bank in the future.

In an interview earlier this year, UBS CEO Ralph Hamers said that it’s never a good thing when a competitor has problems because the reputation of all banks suffers as a result.

For decades, the business models of UBS and CS were quite similar, but have diverged over the past decade or so. UBS saw no need to repaint, merely touching up its success model, as former UBS Chairman Axel Weber liked to say. Credit Suisse has been laboring for years to make a new start without success, and scandal after scandal has beleaguered the bank.

This is reflected in the performance of Credit Suisse’s share price and the corresponding ratings of UBS. The last time UBS banking analyst Brupbacher gave his rival shares a buy rating was in April of last year. At that time, the stock was trading at 9.73 francs, and UBS had formulated a price target of 10.80 francs.

In December 2021, UBS downgraded Credit Suisse shares to neutral, mainly due to the ongoing turbulence surrounding the Greensill funds and the Archegos hedge fund, but also because then Chairman António Horta-Osório had not succeeded in giving the bank a new, credible strategy. UBS’s target price for Credit Suisse’s shares was 9.30 Swiss francs, cut again in February to 8.50 francs and now to 7.50.

It is quite clear. From now on, there will definitely be one financial center – two business models – and the two competitors will open up a new capital in Swiss banking history. While UBS pulls away, Credit Suisse will be hard-pressed to avoid announcing personnel changes when it presents its quarterly figures next Wednesday. That is the only real way it can credibly hold out the prospect of a new start.

UBS has created a new unit dedicated to diversity and inclusion. Switzerland’s largest bank has created a new wealth management unit aimed at mobilizing client funds to offer investments that promote equality and expand outcomes for underrepresented or marginalized groups, according to a report.

Karen Sunderam will lead the group from New York. According to her LinkedIn profile, she has been with UBS for nearly five years and has been the head of inclusive investing solutions since May last year.

By responding to client requests for investment options that reflect personal values and are aimed at social good, UBS will offer clients opportunities to channel their money to firms at least partly owned by minorities. This also includes products led by portfolio managers who self-identify as racial or ethnic minorities, women, veterans, disabled and LGBTQ, «Bloomberg» reported.

Under CEO Ralph Hamers, UBS has dedicated itself to the «purpose» of reinventing investing and connecting people for a better world. Head of sustainability Michael Baldinger was tasked in May 2021 with weaving these threads across the group and advancing diversity.

In the latest of Roger Ng’s 1MDB trial, an FBI agent claims that his wife played a major role in creating a shell company to open an account with Swiss financial giant UBS.

Roger Ng’s wife, Hwee Bin Lim, played a central and crucial role» in helping her husband launder illicit payments from the 1MDB bond deals.

Prosecutors claim that Low and his associates siphoned at least $500 million from the first $1.75 billion bond transactions called «Project Magnolia» with ex-Goldman colleague Tim Leissner testifying that he had received more than $60 million from Low into accounts controlled by his then-wife Judy Chan Leissner before using those accounts to send $35.1 million to Ng through an entity set up by Lim.

In the latest development, FBI special agent Sean Fern took the stand and testified about Lim’s role in setting the shell entity using a raft of emails as proof.

According to Fern, Lim inquired about creating a shell entity one day before the first 1DMB bond deal closed. The shell company – first named «Silken Waters» before later being renamed «Victoria Square» – was opened along with a bank account at UBS.

Although Lim’s mother, Tan Kim Chin, was listed as the beneficial owner, Fern said he traced emails showing that bankers communicated directly with Lim about Victoria Square and the UBS account.

Ng has argued that the money sent from Leissner’s wife to Lim, who has not been charged, was for an unrelated business transaction.

Switzerland’s biggest bank warns about ongoing effects on markets and the global economy from measures caused by Russia’s attack on Ukraine.

Out of UBS’ total emerging market exposure of $20.9 billion at the end of last year, $634 million was attributable to exposure in Russia, the bank said in its annual report for 2021 Monday.

This amount, which has been reduced since, does not include assets totaling $51 million held in the bank’s Russian subsidiary. Nor does it account for unexpected increases in exposures due to settlement risk on certain open transactions with Russian banks and non-bank counterparties or Russian underlying due to sanctions, it said. As of March 3, the bank identified a «small number» of global wealth management clients subject to the recently introduced sanctions, who had outstanding loans below $10 million.

As of the same date, UBS’ market risk exposure to Russia was limited while direct country risk exposures to Ukraine and Belarus as of December 31 were insignificant. Furthermore, the bank does not hold any material reliance on Ukrainian or Belarusian collateral within its Lombard portfolio, it said.

Switzerland’s biggest bank posts its best results in 15 years and lays down new environment, social, and governance goals.

UBS reports net profit for the fourth quarter of $1.3 billion, up 17 percent from the same quarter in the previous year, the bank says in its earnings report Tuesday. Results were supported by favorable market conditions, enabling inflows of net new asset-generating fees within the bank’s global wealth management.

For the financial year, 2021 net profit came to $7.5 billion, up from $6.6 billion in the previous year. Operating profit also rose for the full year, up 16 percent to $9.5 billion. This was after it took a $740 million hit due to litigation costs with France.

Throughout the year the bank increased its sustainability efforts and impact investments to $251 billion from $141 billion. The bank will continue its focus on the environment, social, and governance (ESG) aspirations with a series of new goals.

These include cutting CO2 emissions within its own operations to net-zero by 2025 as well as investing $235 billion in net-zero aligned assets by 2030. Separately the bank will allocate $400 billion to sustainability-focused assets.

Philanthropy also features in its strategy with $1 billion of donations aimed at reaching 25 million beneficiaries by 2025.

After exceeding its CET1 capital ratio target in 2021, the bank raised its CET1 capital guidance to 15 to 18 percent from 13 percent previously.

The bank has proposed a dividend of $0.5 per share from $0.37 the year before. UBS’s share buybacks will also nearly double in 2022 from 2.6 billion in 2021.

UBS is in better shape than ever. For the second year in a row, we achieved our targets, remained disciplined in our costs and saw strong contributions from all regions and divisions, Ralph Hamers, UBS’ group CEO, said in the statement.