Switzerland's UBS has presented a mixed set of first quarter results, missing analysts expectations by 100 million francs. However, the Asia-Pacific region seems to bolster the bank. Why?
The low interest rate environment and the relative strength of the franc, particularly against the euro, negatively impacted on UBS’s business. In addition, more stringent laws and regulations in Switzerland and abroad added to higher costs.
In the first quarter of 2016, heightened economic and geopolitical uncertainty, as well as global market volatility, led to more pronounced client risk aversion. For the industry this translated into abnormally low transaction volumes for a first quarter, and particularly for UBS when compared with the exceptional first quarter of 2015.
Responsible Measures
As of March 2016, the Group achieved 1.2 billion francs of total cost savings compared with full-year 2013, and is on course to achieve its target of 2.1 billion francs net cost reductions by year-end 2017. In addition, UBS continues to take responsible measures to save costs across the firm in light of the current challenging revenue environment.
Wealth Management attracted net new money of 15.5 billion francs, driven by net inflows from all regions, but particularly Asia Pacific, and the ultra high net worth segment.
Further Expansion in China
To further leverage on Asia's growing wealth UBS opened a second office in Hong Kong recently and in March the Swiss firm opened a Shanghai branch confirming its ambition to plug in to China's domestic wealth management market.
«We achieved robust earnings in a difficult market environment. We remained disciplined and focused and benefited from our diversified business model. Given the extraordinarily subdued client activity we utilised our resources more effectively and are making progress on the cost side,» commented UBS CEO Sergio Ermotti.
(More to come)
