UBS, Switzerland's largest lender, reported a surge in first-quarter profit on high client transaction volumes. Based on the expected impact of the coronacrisis on the global economy, the bank also noted a number of headwinds going forward.
Net income at Zurich-based UBS in the first quarter rose 40 percent to $1.6 billion compared with a year earlier, according to a statement released on Tuesday. The cost-income ratio improved 6 percentage points to 72.3 percent.
Uncertain Outlook
Looking ahead, UBS noted that the range of possible outcomes for the global economy remained very wide, adding that it was too early to make reliable predictions about the timing and shape of any potential economic recovery: «Lower asset prices will reduce our recurring fee income, lower interest rates will present a headwind to net interest income, and client activity levels will likely decrease, affecting transaction-based income. The continued disciplined execution of our strategic plans will help to mitigate this.»
The disruption to many businesses and rising unemployment as a result of the pandemic are expected to lead to elevated levels of credit loss expenses for the industry, UBS also said, addressing the key worry of lenders in the current crisis.
Division Results
In the wealth management division (GWM), operating income rose 14 percent, while asset management had a similar size increase of 15 percent. The investment bank improved revenue by 44 percent.
The GWM unit had a pretax of $1.22 billion dollars (up from $863 million); asset management reported pretax of $334 million (down from $387 million) and the investment bank had a profit of $709 million (up from $207 million).
