UBS Reports Profitable Q1, Outflows Fall

May. 7.10 | About: UBS Group (UBS)

UBS AG (NYSE:UBS) has posted its second consecutive quarter of net profit, aided by strong contribution from its Investment Bank division and a drop in client money outflows.

UBS AG reported a first quarter net profit of CHF 2.2 billion ($2.08 billion) compared with a profit of CHF 1.21 billion in the prior quarter and a loss of CHF 1.98 billion in the year-ago quarter.

Solid performance in the fixed income, currencies and commodities business led to significant improvement in the Investment Bank results. Pre-tax profit increased to CHF 1.19 billion from CHF 297 million in the prior quarter.

Invested assets of CHF 2,267 billion on Mar 31, 2010, were up 2% sequentially and 4% year over year, reflecting favorable market performance and positive currency impacts. The results were partially offset by net new money outflows.

However, we are encouraged to see the moderation of outflows in the quarter. UBS reported a decline in net new money outflows to CHF 18.0 billion from outflows of CHF 56.2 billion in the prior quarter.

Wealth Management & Swiss Bank reported net new money outflows of CHF 8.2 billion, down from CHF 33.2 billion in the prior quarter. Outflows at Wealth Management Americas were CHF 7.2 billion compared with CHF 12.0 billion in the previous quarter. Global Asset Management reported outflows of CHF 2.6 billion, down from CHF 11.0 billion in the last quarter.

UBS AG’s Tier 1 capital ratio increased to 16.0% from 15.4% at the end of the prior quarter while risk-weighted assets increased 1% to CHF 209 billion. Core Tier 1 capital ratio increased to 12.5% from 11.9%.


While there remains concern on market uncertainty from European sovereign debt, UBS AG anticipates securities trading markets activity to be consistent with the first quarter. Lending and financial advisory businesses are expected to benefit from the recovery of the banking markets.

As a result of a series of strategic efforts taken earlier, the company expects its wealth management and asset management business results to improve gradually. The company also anticipates net new money outflows to be at somewhat moderate levels in the near term.

The global economic turmoil has severely hurt the Swiss banking major’s balance sheet, when the subprime crisis led to record losses. Additionally, issues emanating from the alleged tax evasion investigation and the dilution of Swiss banking secrecy significantly impacted the company’s performance over the past several quarters. However, restructuring initiatives taken by the company should support results going forward.