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UBS's first-quarter 2015 results
UBS Q1 net profit CHF 2 billion, up 88%
Adjusted1 profit before tax CHF 2.3 billion
Diluted earnings per share CHF 0.53
Best-in-peer-group fully applied Basel III CET1 ratio 13.7%, up 50 basis points
Fully applied Swiss SRB leverage ratio 4.6%, up 80 basis points
Adjusted1 return on tangible equity above target at 14.4%
Zurich/Basel, 5 May 2015 – All UBS's businesses navigated the extraordinary challenges of the first quarter well. This was reflected in a Group adjusted1 profit before tax of CHF 2.3 billion, a very strong result, particularly considering the extreme volatility in foreign exchange rates, currency translation effects and the continued impact of low to negative interest rates on its businesses. UBS reported net profit attributable to shareholders of CHF 1,977 million and diluted earnings per share of CHF 0.53. The quarter showed that clients value UBS's advice and the firm is succeeding in the areas in which it chooses to compete.
“I'm pleased with the strong quarter. We stayed close to our clients, we stayed disciplined on risk and we delivered across all businesses and regions. The results again demonstrate the benefits of a strategy defined early and executed with a focus on long-term value creation.”
Sergio P. Ermotti, Group Chief Executive Officer
UBS continued to demonstrate its fundamental earnings power and ability to perform for its clients in a variety of market conditions. Together, UBS's wealth management businesses delivered the highest profits since 2008 and net new money of CHF 19 billion. They made solid progress with their strategic initiatives to grow lending and increase mandate penetration. Retail & Corporate reported its best first quarter in five years, despite the introduction of negative interest rates in its home market. Global Asset Management posted its best quarter since 2009 and robust net new money. And a solid performance in the Investment Bank, achieved without deploying more risk, demonstrated the strength and consistency of its diversified and client-focused model.
Business division highlights
- Combined wealth management businesses adjusted1 profit before tax CHF 1.1 billion, the highest since 2008; net new money CHF 19 billion
- Wealth Management adjusted1 profit before tax CHF 856 million; net new money very strong at CHF 14.4 billion, taking the annualized net new money growth rate above the target range; adjusted1 cost / income ratio improved and was within the target range
- Wealth Management Americas adjusted1 profit before tax USD 293 million, another quarterly record; net new money USD 4.8 billion, taking the annualized net new money growth rate slightly below the target range; adjusted1 cost / income ratio improved and was within the target range
- Retail & Corporate adjusted1 profit before tax CHF 443 million, the best first-quarter result in five years; annualized net new business volume growth rate, net interest margin and adjusted1 cost / income ratio all improved and were within the target ranges
- Global Asset Management adjusted1 profit before tax CHF 186 million; excluding money market flows, net new money inflows very strong at CHF 7.5 billion; annualized net new money growth rate, excluding money market flows, and cost / income ratio both improved and were within the target ranges
- Investment Bank adjusted1 profit before tax CHF 844 million; adjusted1 annualized return on attributed equity above target; adjusted1 cost / income ratio improved and was below the target range
Results by business division and Corporate Center as reported
First quarter: Group, divisional and Corporate Center performance overview
The Group adjusted1 profit before tax of CHF 2,268 million was a very strong result, particularly considering the abovementioned volatility in foreign exchange rates, currency translation effects and the continued impact of low to negative interest rates on our businesses. We reported a net profit attributable to shareholders of CHF 1,977 million, up 88% on the prior year, and diluted earnings per share of CHF 0.53.
We maintained our position as the best capitalized firm among large global banks, with a fully applied Basel III common equity tier 1 ratio of 13.7% at the end of March, an increase of 50 basis points from the prior year. During the quarter, UBS Group AG raised the equivalent of CHF 3.5 billion in its first capital markets transaction and inaugural issuance of additional tier 1 (AT1) capital. Mainly as a result of this and our retained earnings, our fully applied Swiss SRB leverage ratio increased to 4.6% at the end of the quarter, an increase of 80 basis points from the prior year. AT1 instruments will be an important part of our future capital structure, as they give us the capacity to adapt quickly to new and evolving regulatory requirements.
Wealth Management delivered an adjusted1 profit before tax of CHF 856 million, its best quarterly result since 2008. This included an increase in operating income, largely as a result of higher transaction-based income. Operating expenses declined, supporting the business's strong revenue performance. Net new money was also strong at CHF 14.4 billion, with high-quality net inflows from all regions, particularly Asia Pacific and, notably, also in both domestic and international businesses in Europe.
Wealth Management Americas delivered another record quarterly performance, with an adjusted1 profit before tax of USD 293 million that reflected lower operating expenses. Financial advisor productivity was industry-leading. Net new money was USD 4.8 billion, reflecting net inflows from financial advisors employed with UBS for more than one year. Invested assets reached a record in US dollar terms, reflecting positive market performance as well as net new money inflows. Lending balances continued to show sustainable growth, funded by increases in deposits.
Retail & Corporate posted an adjusted1 profit before tax of CHF 443 million, the business's best first-quarter result in five years. Operating income was strong, reflecting lower credit loss expenses, as well as higher net interest and transaction-based income as pricing measures on loans and deposits helped to offset headwinds from the interest rate environment. Operating expenses decreased, mainly reflecting lower general and administrative expenses.
Global Asset Management recorded an adjusted1 profit before tax of CHF 186 million, its best quarter since 2009. Operating income was higher, primarily due to solid performance fees in O’Connor and A&Q. Operating expenses decreased, mainly reflecting lower charges for provisions for litigation, regulatory and similar matters. Excluding money market flows, net new money was strong at CHF 7.5 billion and included CHF 5.1 billion of net inflows from clients of our wealth management businesses that were mainly into alternative investments, multi-asset funds and equities.
The Investment Bank achieved an adjusted1 profit before tax of CHF 844 million, a very strong result demonstrating the strength and consistent performance of our diversified and client-focused model. Maintaining strict discipline in risk management, Investor Client Services delivered strong revenues of CHF 1,863 million without increasing our risk profile. The business benefited from higher market volatility and strong client activity, driving performances in foreign exchange, rates and credit, equity derivatives as well as global financing services. Corporate Client Solutions revenues rose to CHF 801 million amid increases in debt capital markets, equity capital markets and financing solutions. The adjusted1 annualized return on attributed equity was 46.2%. We are proud to report that the Investment Bank was named Equity Derivatives House of the Year 2014 by leading global capital markets publisher International Financing Review.
As of 1 January 2015, Corporate Center – Core Functions was reorganized into two new units, Corporate Center – Services, and Corporate Center – Group Asset and Liability Management. For the first quarter, Corporate Center – Services profit before tax was CHF 263 million on a reported basis. Gains on sale of real estate and an own credit gain were partly offset by higher real estate restructuring charges. Profit before tax in Corporate Center – Group Asset and Liability Management was CHF 122 million, after revenue allocations of CHF 289 million to business divisions and other Corporate Center units. Retained income increased, mainly related to hedging activities. Corporate Center – Non-core and Legacy Portfolio recorded a loss before tax of CHF 251 million, with fully applied Basel III risk-weighted assets stable at CHF 36 billion, while the Swiss SRB leverage denominator decreased to CHF 84 billion from CHF 93 billion.
At the start of the second quarter of 2015, many of the underlying macroeconomic challenges and geopolitical issues that we have previously highlighted remain and are unlikely to be resolved in the foreseeable future. We are implementing initiatives to improve the pricing of some Wealth Management accounts in light of the interest rate environment in Switzerland and parts of Europe. Excluding potential outflows associated with these initiatives, we expect our wealth management businesses will continue to deliver positive net new money in the second quarter. Thus, despite ongoing and new challenges, we continue to be committed to the disciplined execution of our strategy in order to ensure the firm’s long-term success and to deliver sustainable returns for our shareholders.
1 Please refer to the "Adjusted results" section at the end of this news release for information on adjusted results.
UBS’s First Quarter 2015 Report, letter to shareholders and slide presentation will be available from 06:45 CEST on Tuesday, 5 May 2015 at www.ubs.com/quarterlyreporting.
UBS will hold a presentation of its first quarter 2015 results on Tuesday, 5 May 2015. The results will be presented by Sergio P. Ermotti, Group Chief Executive Officer, Tom Naratil, Group Chief Financial Officer and Group Chief Operating Officer, Caroline Stewart, Global Head of Investor Relations, and Hubertus Kuelps, Group Head of Communications & Branding.
- 09:00–11.00 (CEST)
- 10:00–12.00 (BST)
- 03:00–05.00 (US EDT)
The presentation for analysts can be followed live on www.ubs.com/quarterlyreporting with a simultaneous slide show.
An audio playback of the results presentation will be made available at www.ubs.com/investors later in the day.
UBS Group AG and UBS AG
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