UBS Shares Climb After Investment Banking, Wealth Boost Profit

By Adria Calatayud

UBS Group shares climbed after strong performances across the group's investment-banking and wealth-management arms lifted its first-quarter net profit.

The Swiss bank benefited from strong trading-desk activity amid market volatility during the period and from more wealthy clients parking their money at the bank, reassuring investors on its performance as it approaches the end of the integration of Credit Suisse and tries to soften the blow from Switzerland's plans to revamp its banking rules.

Shares in UBS rose as much as 5.9% in European trading Wednesday, recouping part of their losses earlier in the year due to regulatory uncertainty.

UBS reported a net profit for the first quarter of $3.04 billion compared with $1.69 billion in the year-earlier period. Analysts expected net profit at $2.33 billion, according to consensus estimates provided by the bank.

Its core global wealth-management unit brought in $37.4 billion in net new money during the quarter with inflows across all regions. Its U.S. business recorded inflows too after being hit by outflows for three straight quarters.

Overall revenue rose 13% to $14.24 billion, reflecting double-digit increases in both its wealth management and investment banking. Analysts had forecast revenue of $13.23 billion, according to the same consensus.

Revenue jumped 31% at UBS's investment bank, due to both trading activity and dealmaking. The bank said its global-markets operations posted their best quarterly performance on record, with strength across equities, foreign-exchange, rates, and credit businesses.

UBS said it is on track to buy back $3 billion of its own stock by the time it reports second-quarter earnings and that it still aims to do more by year-end, subject to visibility on parliamentary deliberations on new capital requirements in its home country.

Switzerland's Federal Council last week eased some of the proposed new capital demands due to start being implemented next year. But it stuck to plans to require UBS to fully back its foreign subsidiaries with capital within the Swiss parent bank as part of draft legislation that will now be debated by lawmakers.

"These developments do not, and will not, change who we are as a firm," UBS Chief Executive Sergio Ermotti said. "We are fully committed to protecting our shareholders while mitigating the impact of these increased requirements, if possible, on our clients, employees and the communities where we live and work."

UBS has previously said the new rules would put it at a competitive disadvantage to global peers and threaten its business model, and that it would evaluate all appropriate measures to mitigate the impact of the proposed measures.

The regulatory overhaul is aimed at preventing a repeat of the problems that led to the rescue takeover of Credit Suisse by UBS three years ago, a deal engineered by Swiss authorities that kicked off a multiyear integration process that is coming to an end.

UBS said the integration is due to be completed by the end of the year after it wrapped up last month the transfer of former Credit Suisse clients in Switzerland to its own platform. Executives saw this as one of the most complex phases of the whole integration process and said the move should allow them to dismantle legacy systems, reap cost savings and focus on attracting new clients.

The bank said it remains on track to deliver on its objectives for 2026. Client activity remains healthy in the second quarter as markets have remained broadly resilient amid expectations that a durable diplomatic solution to the Middle East conflict is achievable, it added, cautioning that conditions could shift rapidly.

Write to Adria Calatayud at [e-mail]

(END) Dow Jones Newswires

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