LONDON — UBS said on Tuesday that its first-quarter profit fell 64 percent compared with a year ago, as investor wariness about the financial markets continued to hurt its wealth management and investment banking businesses.
Based in Zurich, the lender has shrunk its investment bank size and shifted its focus to wealth management, an area it considers more consistently profitable but has been hit hard by turbulence in the markets dating to last year.
However, one positive in the quarter was that the amount of net new money invested by clients in the wealth management business increased faster than in the same period last year.
For the three months ended March 31, UBS reported 707 million Swiss francs, or about $738 million. That compared with a profit of 1.98 billion francs in the first quarter of 2015.
“Given deficient client activity levels, we continued to manage our resources effectively while making progress on costs,” Sergio P. Ermotti, the UBS chief executive, said in a news release.
- Procurement Companies, Are They Worth Hiring?
- China’s Steel Makers Undercut Rivals as Trade Debate Intensifies
- Some of the Many Uses of Bulletproof and Bullet Resistant Glass
- Shielded Cables and the Benefits of Utilising Shielded Twisted Pair Cabling in Ethernets
- The market may open lower on subdued Asian stocks.
UBS said some factors that have hurt investor sentiment in recent quarters have stabilized. Still, it warned that macroeconomic challenges and geopolitical risks that have caused clients to be more cautious “are unlikely to be resolved in the foreseeable future.”Wall Street Earnings: A Grim Quarter for Big Banks
It will be another grim year for the nation’s biggest banks. A bad environment struck them for trading and deal-making.
“Negative market performance, substantial volatility, as well as underlying macroeconomic and geopolitical uncertainty, led to more pronounced client risk aversion and abnormally low transaction volumes in the first quarter,” the bank said.
Operating income declined 23 percent to 6.83 billion francs in the first quarter, from 8 to 84 billion francs in the same period a year earlier.
Net interest income, the measure of what a bank earns on its lending after deducting what it pays out on deposits and other liabilities, rose 5 percent to 1.71 billion francs in the quarter, from 1 to 64 billion francs in the first quarter of 2015.
Operating expenses declined 5 percent to 5.86 billion francs in the first quarter, from 6 to 13 billion francs in the same period a year earlier.
UBS’s wealth management division said pretax profit fell 41 percent to 557 million francs in the quarter from 951 million francs in the first quarter of 2015.
UBS said that its wealth management business had 15.5 billion francs in net new money invested by clients in the first quarter, compared with 14.4 billion francs in net new cash in the same period last year.
In the Americas, operated separately, the wealth management business reported a pretax profit of $212 million in the first quarter, a 21 percent decline from $268 million in the same period a year earlier.
UBS’s investment bank reported a pretax profit of 253 million francs in the quarter, down 67 percent from 766 million francs in the first quarter of 2015.