UBS posts best Q1 profit in 15 years, helped by trading growth

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The logo of Swiss bank UBS is seen at its headquarters in Zurich, Switzerland, February 17, 2021. REUTERS/Arnd Wiegmann

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ZURICH, April 26 (Reuters) – UBS (UBSG.S) on Tuesday posted its best first-quarter net profit in 15 years, rising 17% on strong trading, amid expectations for a decline turning uncertainties about the war Ukraine on its head.

Net income of $2.14 billion for the March quarter beat median expectations of $1.79 billion in a survey of 21 analysts compiled by the Swiss bank.

As one of the first two major European banks to report earnings alongside HSBC (HSBA.L), UBS’s earnings contrasted sharply with the earnings declines reported by its US counterparts this month.

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The results show the world’s largest wealth manager and Switzerland’s largest bank are on track to meet improved profit targets outlined by Chief Executive Ralph Hamers in February.

They also point to a growing rift between UBS and smaller rival Credit Suisse (CSGN.S), which is struggling under the weight of a series of scandals. Credit Suisse last week reported an expected loss for the first quarter after tightening regulatory requirements and hitting the fallout from the Russian invasion of Ukraine. Continue reading

Wall Street banks have come under pressure amid a global slump in business activity, but volatility, fueled by concerns about rate hikes and the economic fallout from the Ukraine war, has helped trading tables beat expectations.

UBS’s investment banking business posted a 126% increase in pre-tax profit as an increase in trading revenues in global markets helped offset a decline in capital markets and advisory revenues, impacted by slowing deals and IPO activity .

In the year-ago period, investment banking results were hurt by a $774 million loss from the collapse of US-based client Archegos. Without it, global markets revenue would have grown 4%, UBS said.

Shares are up 3.38%, according to premarket data from Bank Julius Baer.

“UBS has reported good results, beating expectations by around 20%, led in particular by strong IB earnings,” Jefferies analysts said in a statement. “Profitability is above targets and organic growth momentum continues, driven by America (which more than offsets the slowdown in APAC).”

Major US banks saw double-digit profits fall as the Russian invasion of Ukraine, combined with rising inflation and economic uncertainties, eroded investment banking earnings and began hoarding cash to cushion potential loan losses. Continue reading

At Goldman Sachs (GS.N), a 43% drop in earnings beat Wall Street expectations as strong performances in its asset management and trading businesses partially offset a slump in stock issuance. Continue reading

Meanwhile, UBS posted gains in wealth management operating income in the Americas, Switzerland and Europe, largely offset by a slowdown in the activity levels of its wealthy and ultra-high net worth clients in Asia.

The division was able to partially offset a decline in transaction-based revenues with an increase in net interest income, supported by rising US interest rates and higher deposit and loan volumes, as well as higher recurring fees from $19.4 billion in new customer fees. generate inflows.

UBS was cautiously optimistic in its outlook.

“We expect economic activity to continue to grow,

although heightened uncertainty may continue to affect the customer

activity levels and asset prices,” it said, adding that rising interest rates, particularly US dollar rates, would help net interest income.

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Reporting by Brenna Hughes Neghaiwi; Editing by Michael Shields and Muralikumar Anantharaman

Our standards: The Thomson Reuters Trust Principles.

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