CEO Sergio Ermotti is telling investors to hold tight: UBS faces headwinds in both its flagship wealth arm and at the investment bank. The Swiss bank flagged countermeasures.
The Zurich-based bank has six weeks until it reports the first quarter, but CEO Sergio Ermotti seems to have already seen enough to warn investors. UBS is experiencing its toughest quarter in years, the Swiss banker told investors at a conference in London.
«Volatility and volumes are muted with limited activity from institutional and global wealth management clients,» Ermotti said. UBS had little mergers-and-acquisitions activity and few initial public offerings, which led fees lower.
«We've seen some improvement lately but it remains patchy, and not enough to offset the challenging start to the year,» Ermotti said. Total revenue in investment banking is down one-third on the year, he said. The investment bank is coming off a fourth-quarter loss after revenue from nearly every business tanked.
Deeper Cuts
The comments cap a torrid couple of months for Ermotti: the CEO is also grappling with a massive setback in a French criminal trial as well as attempting to stanch speculation about his own succession. To top things off, he has lost a key ally in investment bank chief Andrea Orcel, who left for the top job at Santander last fall.
Ermotti's comments on the poor quarter also translate as a veiled warning for investors banking on UBS' flagship wealth arm to prop up its securities division. He flagged another $300 million in spending cuts this year, for example by stretching out technology projects, slowing hiring, reducing contractors, and trimming travel and entertainment costs.
«Overall, we expect our tactical cost actions to generate at least 300 million francs in cost saves incremental to our strategic actions, with most benefits coming through in the second half of the year,» he said.
