Iqbal Khan, the Antidote to UBS Ailment

Iqbal Khan, the Antidote to UBS Ailment

The UBS result reveals how slowly the bank is growing. It is now betting on wealth management and Iqbal Khan to boost the business. Here's a list of problems that Khan needs to solve.

1. Growth or Payouts?

UBS lowered its sights for 2022 – but not for its main wealth arm. Co-heads Tom Naratil and Iqbal Khan are to lift pre-tax profit by ten to 15 percent annually. Going by last year, the targets begin to look ambitious: net profit rose just four percent, hit by margin pressure.

The pattern repeats in the whole bank, geared strongly towards private banking. UBS recorded an 0.5 percent lower pre-tax profit of $6.04 billion (shareholder’s profit fell by 5 percent).

The Swiss wealth manager returned an eye-watering 80 percent of its profits to shareholders last year, and pledged to continue lifting the dividend. The at first glance good news masks a lack of ideas and impetus at UBS for how to use that money for growth. UBS’ pricey infrastructure needs volume growth to pay off – such as mergers and acquisitions in wealth management.

2. Investment Bank Degraded

If it wasn’t clear already, UBS rammed home the point that it is all about private banking – and thus over to Iqbal Khan, on whom rest the Swiss bank’s growth hopes. UBS’ investment banking as well as asset management strategy? Collaborate with GWM, the Khan- and Tom Naratil-led $2.5 trillion wealth arm. The investment bank in particular will lend to wealthy clients more (see separate point x), tailor homemade products for the super-rich, and manage risks for the wealth unit.

3. Loan Growth Which Earns Its Name

With $2.6 trillion in assets, UBS granted just $179 billion in loans last year to private clients. The bank vowed to push lending more forcefully two years ago, but that has hardly happened: volume edged just four percent higher in the last year. UBS is missing out on a potentially lucrative source of revenue – and Khan needs and wants to step on the gas here. The wealth unit plans to extend loan growth by as much as $30 billion annually. Khan set up an unified global markets arm to do so.

4. Spygate