UBS' quarterly profit slid 27 percent, as revenue from the investment bank tumbled, its wealth arm struggled and a tax credit fell away.

The Zurich-based bank's net profit for the first quarter dropped to $1.1 billion from $1.6 billion year ago, it said in a statement on Thursday. A 6.5 percent cut in spending wasn't enough to offset UBS' 16 percent tumble in revenue. Last year's quarter also included an $241 million pension credit.

The result follows a warning last month from CEO Sergio Ermotti that the first quarter – traditionally the strongest in banking – was the toughest in years. Crosstown rival Credit Suisse on Wednesday posted an 8 percent hike in profits for the same period, following an eventful three-year restructuring.

Wealth Tumble

Profit before tax at UBS' flagship private bank slid nearly 22 percent: fees dropped because the bank managed fewer assets and commissions fell because clients stopped trading, particularly in Asia. «The first quarter of 2019 was characterized by challenging market conditions, which improved towards the end of the quarter and into April,» CEO Ermotti said.

Nevertheless, clients brought $22.3 billion in fresh assets to the wealth arm, which translates to a healthy 4 percent rate of growth. The bulk came from Asia, where UBS has banked heavily on China as the region's biggest and fastest-growing wealth market.

Meanwhile, profits at UBS' investment bank plummeted by nearly two-thirds, where foreign exchange trading was the only bright spot. A downturn in Europe and the Middle East as well as Asia hit stock and bond trading and advising on deals. The unit eked out a meager 7 percent return on equity in the quarter.

Measures in Place

UBS said it is on track with measures such as stretching out technology projects, slowing hiring, reducing contractors, and pruning travel and entertainment costs – a bid to cut another $300 million in spending. «Benefits from these measures should come in the second half of the year, supporting our attractive capital return plan for the year,» UBS said.

Ermotti was more measured than Thiam's buoyancy in his outlook, saying UBS expected global growth has slowed, but that UBS stands to gain because it is regionally and operationally diversified. UBS' rising asset base will bolster recurring income at its private bank and asset management units, the bank said.

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