UBS figures suggest bank has put worst behind it as cash pours in
Published 27/04/2011 | 05:00
UBS appeared to put the financial crisis behind it, with money pouring back into its core wealth management arm in the first quarter, although its investment bank struggled to regain momentum.
The Swiss bank said inflows of 11.1bn Swiss francs ($11.55bn) -- which far outstripped forecasts after they were flat the previous quarter and following big outflows in the first half of 2010 -- showed client trust was returning.
The world's second-largest wealth manager has seen clients withdraw nearly 400bn francs in recent years after it was bailed out following huge writedowns on toxic assets and was hit by US charges that it helped wealthy Americans dodge tax.
UBS said it had had strong inflows in the Asia Pacific region and emerging markets as well as from the ultra wealthy, although it continued to see outflows in Europe, where countries have been chasing tax evaders using secret Swiss accounts.
"This (wealth management inflow) is the highest since Q4 2007 and shows that UBS has now left the crisis behind even in this division, where client trust and confidence were shattered," said Vontobel analyst Dirk Becker.
UBS shares rose 5.2pc to 17.46 francs, while rival Credit Suisse, which reports quarterly earnings tomorrow, rose 1.7pc to 39.52 francs, compared to a 0.3pc firmer European banking index.
"We sense that a comparably weak Q1 result at Credit Suisse may lift UBS shares further," said Silvia Quandt research.
UBS reported a pretax profit of 835m francs at its investment bank, up from 100m francs the previous quarter, but down 30pc year-on-year as revenues from fixed income currencies and commodities (FICC) fell 17pc.
Chief executive Oswald Gruebel's plans to turn around the investment bank, which made the massive losses that almost felled UBS, are under scrutiny after an exodus of top bankers and an admission he underestimated the challenge of reviving fixed income.
Chief financial officer John Cryan told journalists on a conference call UBS was not deviating from those targets today although it would monitor the regulatory environment.
Mr Gruebel has said stiff Swiss standards could force UBS to move units abroad. UBS is not paying a dividend for 2010 or for some time to come as it retains earnings to meet the new requirements.