UBS succeeded in attracting a massive amount of client money at the end of 2022. Does it come at the expense of its arch-rival?
UBS can consider itself lucky. Last year was an extremely difficult one for private banking, but its core Global Wealth Management (GWM) business attracted $60 billion of new fee-generating, according to annual results presented Tuesday.
Additionally, there were net new money inflows of $25 billion into the asset management business and a further two billion Swiss francs in the Switzerland business (P&C) from personal banking.
From Zero to 9 Billion
If new money inflows from the third and fourth quarters are compared, the difference is striking. UBS attracted $9 billion in fee-generating assets in Switzerland in the fourth quarter, $11 billion in Europe, and $4 billion and $3 billion in the Americas and Asia, respectively.
During the third quarter, Switzerland accounted for no fee-generating new money at all, while Europe accounted for $6 billion, the Americas for $4 billion, and Asia for $7 billion in fee-generating assets. Compared with the previous quarter, these assets in the GWM division increased eight percent to $1.271 billion.
In deposits, or «fast» money, $9 billion was added in the fourth quarter in Switzerland and $8 billion in Asia. In other regions, there were outflows, some of them large. This compares with $2 billion in deposits in Switzerland and $6 billion in Asia in the third quarter of the year when the other regions were already negative.
Panic Withdrawals From Credit Suisse
In Switzerland in particular, the increase in fee-generating assets was significant, even though the market environment had not improved much. By contrast, arch-rival Credit Suisse recorded panic-like asset outflows of around 84 billion Swiss francs in October and November of last year, raising the question as to whether the money crossed the street to UBS. Nothing about a possible «Credit Suisse effect» emerges from the UBS report.
From a foreign client's point of view, it is somewhat plausible to transfer part of the money from one major Swiss bank to the other, if one of them is no longer trusted. By all accounts, Credit Suisse outflows were particularly strong in Asia, but it is precisely there that UBS does not seem to have benefited.
Melting Earnings Base
Either way, UBS is in desperate need of the new volumes, as invested assets across the entire group have melted by more than $600 billion in 2022.
The bank is feeling the effects in terms of earnings. In the fourth quarter of 2022 alone, total GWM income fell 5 percent year-on-year to $4.6 billion and would have been even lower had it not been for the sale of a fund platform in the US. Recurring fee-based income decreased by 17 percent due to declining markets. Transaction-based income was down 19 percent due to low customer activity, and net credit loss recoveries were $3 million.
At least the interest margin increased considerably. Fourth-quarter net interest income increased 35 percent, mainly due to an increase in deposit-taking income, according to the results.
