UBS fourth quarter net profit attributable to shareholders of CHF 1.3 billion. Full year net profit of CHF 7.2 billion
- For 2010, net profit attributable to UBS shareholders was CHF 7.2 billion compared with a loss of CHF 2.7 billion in 2009. 2010 diluted earnings per share of CHF 1.87 compared with negative CHF 0.75 in 2009, and return on equity of 15.9 % for 2010 compared with negative 7.8% at the end of last year
- During 2010 our BIS tier 1 capital ratio increased to 17.7% from 15.4% and our BIS core tier 1 capital ratio increased to 15.3% from 11.9% at the end of 2009. We will continue to retain earnings to meet capital requirements and will not pay a dividend for 2010
Cost discipline maintained; we achieved our fixed cost target of less than CHF 20 billion for 2010
2010 bonus pool reduced by 10% to CHF 4.3 billion from CHF 4.8 billion in 2009
In the fourth quarter net profit attributable was CHF 1,290 million, with diluted earnings per share of CHF 0.33, reflecting a significantly lower tax credit of CHF 149 million compared with CHF 825 million in the third quarter
Fourth quarter profit before tax increased to CHF 1,161 million from CHF 818 million in the third quarter. Results reflect increased client activity across all businesses and includes credit loss expenses of CHF 164 million, own credit losses of CHF 509 million as well as increased general and administrative expenses
Industry leading BIS tier 1 capital ratio of 17.7% compared with 16.7% in the prior quarter
BIS core tier 1 capital ratio increased to 15.3% from 14.2% in the third quarter
Net new money stabilized with net new money of CHF 7.1 billion in the quarter. Inflows across all asset gathering businesses
Our businesses: Wealth Management pre-tax profit stable. Retail & Corporate's pre-tax profit lower on increased credit loss expenses. Positive revenue momentum in Wealth Management Americas but the business incurred a pre-tax loss due to litigation provisions. Considerably improved net new money inflows of CHF 3.4 billion. Pre-tax profits in Global Asset Management up 18%. Improved Investment Bank result on third quarter, with revenues up 17%
Balance sheet decreased 10% and risk-weighted assets down 5% over the fourth quarter
Zurich/Basel, 8 February 2011 - Commenting on UBS's fourth quarter 2010 results, Group CEO Oswald J. Grübel said: "While we made substantial progress in 2010, we are fully aware that we have to continue to improve our results."
Fourth quarter 2010 net profit attributable of CHF 1,290 million
UBS reports a fourth quarter net profit attributable to UBS shareholders of CHF 1,290 million compared with CHF 1,664 million in the third quarter. Group results include an own credit charge of CHF 509 million, net credit loss expenses of CHF 164 million and a tax credit of CHF 149 million, significantly lower than the CHF 825 million tax credit recorded in the third quarter. Total litigation provisions for the Group were CHF 230 million.
Wealth Management's pre-tax profit was CHF 488 million compared with CHF 492 million in the previous quarter. Excluding a charge of CHF 40 million to reimburse the Swiss government for costs incurred in connection with the US cross-border matter, pre-tax profit increased CHF 36 million, or 7%, compared with the third quarter. Operating income improved 3% to CHF 1,803 million compared with CHF 1,759 million in the prior quarter as client trading activity increased, and despite headwinds from the strengthening of the Swiss franc. The gross margin on invested assets was 92 basis points, an increase of 3 basis points compared with the prior quarter, reflecting a 2% increase in revenues, mainly due to increased client activity, and a 1% reduction in the average invested asset base. Despite strong investment performance, invested assets declined on the strengthening of the Swiss franc against the euro and US dollar. Over 60% of Wealth Management's assets are denominated in euros or US dollars. Net inflows of new money were very small during the fourth quarter compared with CHF 1.0 billion in the prior quarter. We saw inflows in the Asia Pacific region, in emerging markets and globally from ultra high net worth clients. Costs increased 4% to CHF 1,315 million compared with CHF 1,267 million in the prior quarter.
Retail & Corporate's revenues were CHF 931 million compared with CHF 966 million in the third quarter. Pre-tax profit was CHF 387 million compared with CHF 446 million in the previous quarter, mainly resulting from higher credit loss expenses. Credit loss expenses increased to CHF 63 million compared with CHF 7 million in the third quarter, primarily due to loan loss provisions related to a small number of clients. Excluding credit loss expenses, operating income increased to CHF 995 million from CHF 973 million in the previous quarter. Notwithstanding these credit losses in the fourth quarter, for 2010 as a whole we experienced relatively low levels of credit losses. Net credit loss expense for 2010 was CHF 76 million, a decline of over CHF 100 million compared with 2009, reflecting the quality of our credit portfolio. Costs increased by CHF 24 million to CHF 544 million, mainly as a result of higher depreciation relating to IT investments.
Wealth Management Americas' pre-tax result was a loss of CHF 33 million compared with a loss of CHF 47 million in the third quarter. Revenues increased 3% to CHF 1,379 million compared with CHF 1,338 million in the previous quarter. In US dollar terms, operating income improved 7% to its highest level since third quarter 2008. The quarter included litigation provisions of CHF 152 million. Net new money inflows were CHF 3.4 billion, a substantial improvement compared with net inflows of CHF 0.3 billion in the third quarter. This reflects a strong performance from financial advisors employed with UBS for more than one year. Including interest and dividend income, Wealth Management Americas had net new money inflows of CHF 8.8 billion compared with CHF 4.6 billion in the third quarter. The gross margin on invested assets increased 3 basis points to 80 basis points, due to a 3% increase in income compared with the prior quarter. Average invested assets were relatively flat. Costs increased 2% to CHF 1,412 million.
Global Asset Management's pre-tax profit was CHF 135 million, up 18% compared with CHF 114 million in the third quarter. Higher performance fees, mainly in alternative and quantitative investments, were partly offset by higher personnel expenses. Revenues increased to CHF 542 million compared with CHF 473 million, mainly due to higher fees in alternative and quantitative investments and, to a lesser extent, global real estate. Net new money inflows from third parties were CHF 3.8 billion, mostly offset by net outflows of CHF 2.8 billion from clients of UBS's wealth management businesses. Costs were CHF 407 million compared with CHF 359 million reflecting higher personnel and general and administrative costs.
The Investment Bank's pre-tax profit was CHF 75 million compared with a loss of CHF 406 million in the third quarter. The result was affected by an own credit loss of CHF 509 million compared with an own credit loss of CHF 387 million in the third quarter, reflecting in part the tightening of our credit spreads over the quarter. Operating income increased 17% to CHF 2,158 million compared with CHF 1,842 million in the previous quarter. There were increases in revenues across all business areas, in particular the Investment Banking department where revenues more than doubled to CHF 910 million compared with CHF 422 million in the prior quarter, due to increased market activity and improved market share. Equities revenues increased to CHF 945 million compared with CHF 904 million in the third quarter as the cash and derivatives and equity-linked businesses all recorded increases. In the fixed income, currencies and commodities business revenues were up 6% to CHF 920 million compared with CHF 869 million in the third quarter. Concerns relating to European sovereign debt and the impact of quantitative easing efforts increased volatility. This resulted in subdued client risk appetite, especially in credit, where revenues declined, and emerging markets, although it benefited our foreign exchange business. In the Macro business revenues rose to CHF 372 million compared with CHF 291 million, as improved customer activity drove increased revenues in the foreign exchange business. In emerging markets, revenues decreased to CHF 90 million compared with CHF 117 million in the third quarter. Costs reduced mainly due to lower personnel expenses. The Investment Bank's result also included a net credit loss expense of CHF 108 million compared with a net credit loss recovery of CHF 35 million in the prior quarter, reflecting, among other things, impairments in our student loan auction rate securities portfolio. The Investment Bank continues to focus efforts on reducing its cost/income ratio in the near term.
Treasury activities and other corporate items generated a pre-tax profit of CHF 109 million in the fourth quarter, compared with CHF 219 million in the third quarter.
Net profit attributable to non-controlling interests was CHF 21 million compared with a net loss of CHF 21 million in the third quarter.
Net new money and invested assets:
Wealth Management – Net new money inflows were very small compared with net inflows of CHF 1.0 billion in the prior quarter, with net inflows in the Asia Pacific region, in emerging markets and from ultra high net worth clients globally.
Wealth Management Americas – Net new money inflows were CHF 3.4 billion compared with outflows of CHF 0.3 billion in the third quarter.
Global Asset Management – In the fourth quarter, net new money inflows were CHF 1.0 billion compared with very small inflows in the prior quarter.
Invested assets were CHF 2,152 billion on 31 December 2010 compared with CHF 2,180 billion on 30 September 2010. Positive market movements and net new money inflows were more than offset by the depreciation of the US dollar and euro against the Swiss franc. Of the invested assets, CHF 904 billion were attributable to Wealth Management & Swiss Bank (CHF 768 billion thereof attributable to Wealth Management and CHF 136 billion attributable to Retail & Corporate); CHF 689 billion were attributable to Wealth Management Americas; and CHF 559 billion were attributable to Global Asset Management.
Capital position and balance sheet
Our BIS tier 1 capital ratio increased for the seventh consecutive quarter to 17.7% on 31 December 2010 compared with 16.7% at the end of the prior quarter, and our BIS core tier 1 capital ratio increased to 15.3% from 14.2% over the same period. Our risk-weighted assets declined 5%, mainly due to foreign exchange movements, while our balance sheet decreased 10% to CHF 1,317 billion compared with CHF 1,461 billion in the third quarter.
In the first quarter we expect some improvement in the Investment Bank's trading results compared with the two prior quarters, but this will as always largely depend upon market conditions and the volume of business that our customers transact with us. We do expect the investments we have been making in certain of our securities trading operations to bear fruit during 2011. The Investment Banking Department (IBD) has a promising book of financial advisory business. For the coming quarter, however, we do not expect IBD to match its seasonally strong fourth quarter result, at least not in its advisory business. In our wealth and asset management divisions, we expect client activity in the first quarter to be above fourth quarter levels, supporting transaction-based revenue in those divisions. We are optimistic that overall positive net new money inflows will continue in the first quarter. For the full year, we believe that net new money will strengthen noticeably.