UBS news

UBS reports first quarter net profit of CHF 2,423 million

Quarterly Results

Best quarterly performance ever, double the result reported in first quarter 2003 (up 100% or 82% before goodwill amortization) - Operating income up 33% with revenue growth in all businesses - Annualized RoE at 29.2% (31.9% before goodwill), and earnings per share up 114% (up 95% before goodwill) -- both at all-time highs - Net new money of CHF 35 billion in total, with record CHF 19 billion from wealth management clients worldwide

   Quarter ended

     % change from

CHF million






Operating income

10 295

8 538

7 768



Operating expenses

7 206

6 303

6 174



Operating profit before tax and minority interest

3 089

2 235

1 594



Net profit

2 423

1 808

1 209



UBS reports net profit of CHF 2,423 million in first quarter 2004, a 100% rise from the same period a year earlier, and the best quarterly performance on record. Before goodwill amortization, net profit rose 82%.

"This outstanding performance reflects the excellent conditions in major financial markets. It also shows the payoff from investing in our businesses countercyclically over the past few years -- positioning ourselves for exactly these kinds of opportunities. And it demonstrates that we are growth managers as well as cost and risk managers," said Peter Wuffli, Chief Executive Officer.

All businesses reported both revenue and pre-tax profit gains in first quarter compared to a year earlier. The Investment Bank recorded a 115% gain in pre-tax profit, with results driven by the best fixed income and second best equities performances since 2000. The Wealth Management and Global Asset Management businesses reported their best results in three years, and the Wealth Management USA business saw its best operating performance since PaineWebber became part of UBS.

Net new money flows show that UBS's wealth and asset management businesses are growing fast. This quarter saw clients adding a total of CHF 35.1 billion to their investments with UBS. Inflows from institutional asset management clients reached an all-time high of CHF 10.1 billion. Private clients contributed a record CHF 19.0 billion to the wealth management businesses worldwide, compared to CHF 11.1 billion a year earlier and CHF 14.2 billion in fourth quarter 2003. The domestic European wealth management business saw a record inflow of CHF 4.2 billion.

Operating income was up 33% from first quarter 2003 to its highest quarterly level ever. Revenues rose across all categories. The increase in market levels positively impacted the asset base of the wealth and asset management businesses, prompting fee-based revenue to rise. Fee and brokerage income profited from the seasonally strong first quarter and a much improved market environment that saw significantly increased institutional and private client activity.
Corporate finance fees grew 75% in an improving M&A environment, with the total global corporate fee pool increasing by 40%.

Increased market risk limits allowed UBS to take advantage of the favorable trading conditions in first quarter. Set against a 34% increase in average Value at Risk (VaR) compared to a year earlier, total income from trading activities rose 33%. Equities trading income was at its highest level since first quarter 2001, driven by a rapid expansion in market volumes, far higher client activity levels and therefore a significant improvement in trading opportunities. Proprietary trading revenues recovered sharply from the particularly weak first quarter in 2003. Fixed income trading continued to perform strongly, driven by another quarter of favorable interest rates and yield curve configuration, alongside strong client flows.

UBS experienced another excellent credit result, posting a net credit recovery of CHF 3 million in first quarter 2004 compared to a credit loss expense of CHF 69 million a year earlier.
Operating expenses, up 17% from first quarter 2003, rose far less than revenues, with the increase mainly reflecting higher accruals for performance-related compensation.

Global brand campaign launched
One of the key elements in UBS's growth strategy is the firm's investment in building a strong brand. This was reflected in a new global advertising campaign launched in February. The campaign -- themed "You and us" -- shows how UBS delivers global financial resources through personal client relationships based on intimate understanding. The advertising investment concentrates on key markets where UBS needs to further build familiarity with its brand in order to achieve its growth targets -- particularly the US.

Senior executive appointment
Georges Gagnebin, currently Chairman of the Wealth Management & Business Banking Business Group, has decided to pursue a new challenge within UBS. On 1 October 2004, he will step down from the Group Executive Board to focus full-time on his role as Vice Chairman of the holding company housing our independent private banks and the GAM asset management business.
Georges Gagnebin held several senior management roles with UBS over the last 13 years, and was head of the firm's private banking business from 2000 to the middle of 2002. UBS is grateful for his valuable contribution in building the firm's wealth management business into the leading franchise worldwide.

For UBS, the year started with an extremely strong first quarter. Conditions in all businesses were simultaneously excellent. As the year progresses, such a positive combination of circumstances is not likely to continue, in particular given the natural seasonality which boosts the first quarter in some businesses.
"With our businesses firing on all cylinders and the growth indicators all showing positive, we have every reason to feel optimistic about UBS's future," said Clive Standish, Chief Financial Officer.

Financial ratios
Annualized return on equity for first quarter 2004 was 29.2%, compared to 13.2% a year earlier. Basic earnings per share were CHF 2.25 in first quarter 2004, compared to CHF 1.05 a year earlier. The cost/income ratio was 70.0%, compared to 78.8% a year earlier.

Performance against UBS financial targets
(pre-goodwill and adjusted for significant financial events)
UBS sets its financial targets and evaluates performance in terms of adjusted results, excluding significant financial events* and excluding the amortization of goodwill and other intangible assets.
UBS's performance against financial targets shows:

  • Annualized return on equity in first quarter 2004 was 31.9%, up from 15.8% a year earlier and well above the target range of 15 to 20%. It was the best result ever, reflecting higher net profit combined with a lower average level of equity resulting from continued share buyback programs.

  • Basic earnings per share also stood at CHF 2.46, the highest level ever, up 95% from the CHF 1.26 seen in the same quarter a year ago, driven by the same factors as return on equity.

  • The cost/income ratio was 67.8%, an improvement from 75.7% in the same period last year -- and the lowest level since 2000. Its progress reflects higher revenues generated from a fixed cost base that has been steadily reduced over the last few years.

Year to date (annualized as applicable)




RoE (%)

as reported





before goodwill and adjusted for significant financial events





For the quarter ended




Basic EPS (CHF)

as reported





before goodwill and adjusted for significant financial events





Cost / income ratio (%)

as reported





before goodwill and adjusted for significant financial events





Net new money, wealth management units (CHF billion)


Wealth Management




Wealth Management USA








Results from the Business Groups

Wealth Management & Business Banking
Wealth Management
's pre-tax profit in first quarter 2004 was CHF 868 million, up 23% from fourth quarter 2003. This represents the highest level in three years. Recurring income increased on rising asset-based fees, benefiting from gains in market levels. Non-recurring income rose due to higher brokerage fees, which reflected a strong increase in client activity levels in the more positive market environment. This increase in revenue, supported by the continued effort to enhance the client offering with value-added products and services, drove gross margin on invested assets up to 107 basis points from 100 basis points in the previous quarter.

The first quarter 2004 net new money inflow of CHF 16.2 billion, was up 153% from fourth quarter on record inflows from both international and Swiss clients. Net new money inflows from existing clients were particularly high. The European wealth management business achieved net new money inflows of CHF 4.2 billion.

Business Banking Switzerland reported a pre-tax profit of CHF 510 million -- a 5% decrease from fourth quarter 2003. Operating income was lower, mainly driven by decreased interest income from its reduced recovery portfolio and by a drop in fee income compared to particularly high levels in fourth quarter.

Business Banking Switzerland's loan portfolio, at CHF 138.6 billion, was up CHF 1.4 billion from the level on 31 December 2003. An increase in mortgages for private clients was partly offset by the ongoing workout of the recovery portfolio.

Global Asset Management
Global Asset Management reported a pre-tax profit of CHF 144 million in first quarter 2004, up 29% from fourth quarter 2003. It was the highest quarterly result since 2000. The increase was mainly attributable to higher management fees reflecting the gains in invested assets from excellent net new money inflows and continued strong market valuations. Operating expenses rose less than income as lower general and administrative expenses partially offset the revenue-driven increase in incentive-based compensation.

In the Institutional business, net new money totaled CHF 10.1 billion, a significant gain from CHF 1.4 billion in fourth quarter 2003. It was the best result ever reported and reflects the strength of long-term investment performance. In the Wholesale Intermediary business, net new money outflows were CHF 1.4 billion in first quarter 2004, compared with CHF 8.3 billion in fourth quarter 2003, mainly due to money market outflows related to the launch of UBS Bank USA. Before the bank's launch in third quarter 2003, private client cash balances in the US were swept into money market funds. Now they are redirected automatically into FDIC-insured deposit accounts.

Invested assets for Global Asset Management totaled CHF 602 billion on 31 March 2004, up from CHF 574 billion on 31 December 2003. Most of Global Asset Management's funds showed a strong relative investment performance over one-year, three-year, five-year and 10-year periods.

Investment Bank
The Investment Bank recorded a pre-tax profit of CHF 1,674 million in first quarter 2004, up 115% from the same period a year earlier. This reflected a significant rise in revenues across all areas, particularly in the Equities business and in the Fixed Income, Rates and Currencies (FIRC) area, which posted another record result.

Operating income was a record CHF 4,937 million in first quarter 2004, representing a 54% increase from a year earlier (up 39% from fourth quarter 2003). The main contributors were the FIRC and Equities businesses, which capitalized on favorable trading conditions and higher client volumes. Fixed Income, Rates and Currencies revenues rose 19% from a year earlier (up 82% from fourth quarter 2003). Excellent results in rates, foreign exchange and cash and collateral trading drove performance year-on-year. Equities revenues gained 109% from a year earlier (up 23% from fourth quarter). The results reflected improved market conditions, strong demand for derivative and cash products from key client segments, higher proprietary revenues and the ability of the business to efficiently process high trading volumes. Investment Banking revenues rose 59% from a year earlier (down 27% from seasonally strong fourth quarter), reflecting increased activity in mergers and acquisitions, continued favorable debt capital markets and improving market conditions for equity issuance. Performance in the Private Equity business continued to improve, with revenues of CHF 165 million in first quarter compared to negative CHF 75 million a year earlier, with improved market conditions allowing a number of successful divestments and a reduced level of writedowns.

Total operating expenses rose 35% from a year earlier, reflecting the rise in personnel expenses in line with improving revenues. Annual performance-related payments are driven by the revenue mix across business areas and are managed in line with market levels.

Wealth Management USA
In first quarter 2004, pre-tax profit of Wealth Management USA stood at CHF 43 million compared to a pre-tax loss of CHF 10 million in fourth quarter 2003. The improvement was driven by strong operating performance and lower retention costs. Before acquisition costs (goodwill and intangible asset amortization, net goodwill funding costs and retention payments), pre-tax profit increased 20% to CHF 218 million from CHF 181 million in fourth quarter 2003.

Because Wealth Management USA's business is almost entirely conducted in US dollars, comparisons of first quarter results to prior periods are affected by movements of the US dollar against the Swiss franc. Excluding this currency effect and before acquisition costs, pre-tax profit reached a record high, increasing 23% from fourth quarter 2003. Revenues were driven by record levels of recurring fees, higher levels of activity among private clients and higher net interest income, reflecting the impact of UBS Bank USA. These positive effects were partially offset by a decline in municipal finance income due to lower origination volumes across the industry and changes in the interest rate environment affecting the value of municipal securities. At the same time, costs continued to be tightly managed.

The inflow of net new money was CHF 2.8 billion in first quarter 2004, and although it declined from the CHF 7.8 billion in fourth quarter 2003, the first quarter result compares satisfactorily to performance reported by US peers.

Financial advisors continued to be among the most productive in the industry, with productivity per financial advisor (private client revenues per financial advisor) rising to CHF 172,000 in first quarter 2004 from CHF 155,000 in fourth quarter 2003.

Zurich / Basel, 4 May 2004


Key Messages video

Webcast video