UBS registers 40% increase in net profit in Q1 2020

Maria Nikolova

UBS’s first quarter 2020 results reflected high client transaction volumes in Global Wealth Management and the Investment Bank.

UBS has just posted a set of solid financial results for the first quarter of 2020, with net profit staging a steep increase over the equivalent period a year earlier.

Net profit attributable to shareholders was approximately $1.6 billion, up 40% from a year earlier. Diluted earnings per share for the first quarter were $0.43, up 43% from the year-ago quarter. UBS notes that its first quarter 2020 results reflect high client transaction volumes in Global Wealth Management and the Investment Bank.

UBS’s first quarter pre-tax profit was $2,008 million, up 30% from a year earlier. The cost/income ratio was 72.3%, a 6 percentage point improvement in annual terms. Return on CET1 capital was 17.7%. Total net credit loss expenses amounted to $268 million, of which $122 million in the Investment Bank, $77 million in Personal & Corporate Banking, $53 million in Global Wealth Management, and $16 million in Non-core and Legacy Portfolio.

Global Wealth Management saw operating income rise by 14% in the first quarter of 2020, with consistently high revenues in each month, resulting in the highest level since the financial crisis. The segment registered a 46% improvement in transaction based income, with net interest income up 2% on higher lending revenues, and despite further pressure on interest rates.

Asset Management saw operating income increase by 15% on the back of strong performance with both higher management and performance fees. Net management fees increased by 14%, reflecting higher average invested assets as well as continued positive momentum in net new run rate fees. Performance fees increased by $9 million.

Investment Bank (IB) marked a 242% jump in pr-tax profit in the first quarter of 2020. Global Markets revenue increased by 44% or $619 million, due to significantly higher volumes and volatility, particularly in Foreign Exchange, Rates and Cash Equities revenues, reflecting the impact of the COVID-19 pandemic on client activity levels. Global Banking also rose 44% or $164 million, reflecting the closing of a number of large transactions in Advisory and higher Equity Capital Markets revenues. Mark-to-market losses in Capital Markets were offset by gains on related hedges.

On the downside, Group Functions loss before tax was $410 million, including income in Group Treasury from accounting asymmetries (which tend to mean-revert to zero over time) including hedge accounting ineffectiveness of net negative $167 million and valuation losses in Non-core and Legacy Portfolio of $143 million on auction rate securities.

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