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.

Read this next

Institutional FX

Invast Global ramps up its offering with 10 soft commodity CFDs

Sydney-based prime-of-prime provider Invast Global has expanded its offering with the addition of ten soft commodity CFDs, which increases their index and commodity CFD offering to 35 instruments.

Retail FX

FF Simple and Smart Trades says Goodbye to CySEC authorization

The Cyprus Securities and Exchange Commission (CySEC) confirmed that it has wholly withdrawn the Cyprus Investment Firm (CIF) licenses of FF Simple and Smart Trades Investment Services Ltd.

Crypto Insider

Shining the Light in Crypto’s Dark Places

Something changed in regulators’ minds after the November crash of the FTX crypto exchange.

Executive Moves

Financial Commission Adds Sam Low to Dispute Resolution Committee

The Financial Commission (FinaCom PLC), a dispute resolution service that caters to the financial services industry, has appointed Sam Low as the newest member of its Dispute Resolution Committee (DRC).

Digital Assets, Uncategorized

De-facto owner of Bithumb exchange arrested in South Korea

South Korean prosecutors have arrested Kang Jong-Hyun, the anonymous chairman and owner of the country’s largest cryptocurrency exchange, Bithumb, on charges of embezzlement and stock manipulation.

Retail FX

Interactive Brokers volumes snap three-month losing streak

Electronic brokerage firm Interactive Brokers LLC (NASDAQ:IBKR) said its trading volumes rose in January, an indication that investor confidence in the financial markets is rebounding after having been fairly mixed over the past few months.

Digital Assets

VVF invests $5 million in Everscale, a potential Layer 2 solution for Venom blockchain

“For us, this is a strategic investment aimed at the technological development of projects and teams around technologies that we focus on and actively develop. In particular, we are talking about the Venom blockchain project and its ecosystem, which is planned to be launched soon and for which Everscale is a potential Layer 2 solution.”

Institutional FX

FXSpotStream volume ends string of declines on January rebound

Trading volumes on institutional FX platforms surged in January as traders increased their bets on central bankers’ policy with evidence mounting that inflation and economic growth are both losing momentum.

Industry News

DeFi firm Aurox launches SEC-compliant crowdfunding campaign on tZERO

“This is a great opportunity for us to raise capital from our community and the broader public on a leading fully regulated platform. We are confident that the tZERO Markets platform will provide us with the exposure and reach we need to attract a diverse investors to support our business growth.”