UBS Reports Drop in Net Profit, But Remains Stable for Clients During Uncertainty

UBS has reported a 52% decline in net profit for the first quarter of 2019, reaching $1.03 billion. This comes in below analyst expectations of a net profit nearing $1.75 billion for the period. Although these are the bank’s first results since announcing its takeover of rival Credit Suisse, UBS CEO Sergio Ermotti resumed his post on April 5 and said, “We saw some inflows coming from Credit Suisse, but, most importantly, we continue to see even after the transaction, we saw inflows, so the demonstration that our clients believe we are a source of stability.”

Increased Provisions Due to Litigation

Following a US residential mortgage-backed securities litigation matter, UBS’s net income took a hit from increased provisions of $665 million. Speaking to CNBC’s Geoff Cutmore, Ermotti said, “We are in advanced discussions. Hopefully, we can close this 15-year old chapter very soon.” Despite this, Ermotti described the latest results as “very solid.”

Additional Highlights

Throughout the first quarter, revenues reached $8.75 billion compared to $9.38 billion a year ago. Operating expenses were $7.2 billion from $6.6 billion a year ago. The CET 1 capital ratio, a measure of bank solvency, was 13.9% compared to 14.1% a year ago. UBS attracted $28 billion in net new money in its global wealth management unit, $7 billion of which were registered in the last 10 days of March, following the announcement of its acquisition of Credit Suisse.

UBS shares have risen more than 10% since the news of its acquisition of Credit Suisse last month. The bank claims that the acquisition will make it a “leading global wealth manager” with more than $5 billion in total invested assets. However, analysts at Barclays believe that the market is “significantly underestimating” the complexity of integrating Credit Suisse within UBS. Ermotti told CNBC on Tuesday that the merger should be completed within the second quarter. Despite the decline in net profit, UBS remains a source of stability for its clients during periods of high uncertainty.