UBS profit jumps 40 per cent despite coronavirus disruption
UBS reported a sharp rise in first-quarter net profit, helped by higher trading volumes as clients reacted to market volatility.
Net profit rose 40 per cent year on year to £1.6bn. UBS had said earlier this month it expected a net profit for the period around $1.5bn.
Market volatility helped UBS’s investment bank post a 242 per cent jump in pretax profit. Global markets revenue increased 44 per cent “due to significantly higher volumes and volatility”. Pretax profit rose 52 per cent at the asset management business and 41 per cent in the global wealth management division.
Operating income was $7.9bn compared to $7.2bn a year ago. Additionally the bank’s return on tangible equity hit 12.8 per cent, compared to 9.8 per cent in the same period last year.
Credit loss expenses rose to $268m from $20m last year. Of this, $122m was in the investment bank business and $53m in its key wealth management business. UBS said the disruption caused by the pandemic will “lead to elevated levels of credit loss expenses for the industry.”
UBS said it could not predict the timing and shape of any potential economic recovery, but it would be negatively impacted by the crisis. “Lower asset prices will reduce our recurring fee income, lower interest rates will present a headwind to net interest income, and client activity levels will likely decrease, affecting transaction-based income,” the bank said.
Chief executive Sergio P. Ermotti said: “As a result of years of disciplined strategic execution, risk management and sustained technology investments, we enter these turbulent times from a position of strength.
“This quarter, UBS performed at its best in all dimensions, and demonstrated the true character of our organisation and our people in that we were able to support our clients with advice, credit and liquidity at the time they need it the most and provide support to the communities in which we operate, while creating value for shareholders.”