Profit at Switzerland’s largest bank UBS fell 52 percent to about $1 billion (about CZK 21.2 billion) in the first quarter. The financial institution is preparing to take over its smaller rival, Credit Suisse, which has encountered problems. UBS has set aside $665 million for litigation related to the bank’s role in selling mortgage securities before the financial crisis. The company said in a statement today.
Fifteen analysts in a UBS poll estimated first-quarter profit at $1.7 billion. Revenue fell to $8.75 billion from $9.38 billion a year ago.
UBS reported $42 billion in client inflows
As the world’s largest wealth manager, UBS reported $42 billion in client inflows in the first three months of the year. Its flagship wealth management division raised $28 billion in net new money, $7 billion of which came in the last ten days of March after the announcement of the Credit Suisse takeover. By comparison, Credit Suisse clients withdrew about $53 billion from their bank in the quarter. At the end of March, UBS had assets under management totaling $4.16 trillion. As recently as the end of December, it was $3.96 trillion.
UBS also warned that geopolitical tensions and recent liquidity concerns in the banking sector are reducing client activity and could affect new money in the coming months. Retaining clients and assets will be crucial for Sergio Ermotti, who has returned as CEO of UBS, to oversee the Credit Suisse takeover and restructuring.
Credit Suisse is the second largest bank in Switzerland. But in March, it ran into such severe problems that it began to threaten the financial stability of the global banking sector. So the Swiss government, central bank, and regulators stepped in and negotiated a rescue of the bank, with its larger domestic rival UBS taking it over for three billion Swiss francs (more than CZK 71 billion). He will also gain losses of up to five billion francs.
Source: CTK
