UBS’ U.S. wealth management arm provided a silver lining in an otherwise dismal quarter for the Swiss banking company.
UBS Wealth Management Americas reported its highest quarterly pre-tax profit of $209 million, up 34% from the previous quarter and 75% from a year earlier, as assets rose 7% to $807 billion, as revenue surged.
Revenue reached $1.57 billion, up 4% from the previous quarter and 8% from a year earlier, due primarily to higher transaction-based revenue, higher realized gains from the sale of financial investments in available-for-sale portfolio, growth in managed account fees, and higher banking-related and lending-related interest income.
The company reported Wednesday that revenue per advisor increased to $897,000, up 3% from the end of the fourth quarter and 5% from a year earlier. Revenue per advisor includes all UBS financial advisors. The company said that it “continue to believe that our FA productivity is the highest in the industry.” Its advisor headcount increased 0.7% from the previous quarter and 3% from a year earlier to 7,015.
Invested assets per advisor were rose to $115 million, up 6% from the previous quarter and 3% from a year earlier. The company said it has led the industry in this metric for nine consecutive quarter.
The parent company reported that first-quarter profits were halved as a result of a poor quarter from its investment bank.
The company took a $1.28 billion charge on its debt, which led to a hefty pretax loss.
Switzerland's biggest bank, trying to recover from a series of setbacks, including a rogue trading scandal, was cautious on the outlook for the second quarter. It said economic worries rattling wealthy clients such as the eurozone debt crisis and the U.S. deficit were likely to take a toll.
"Failure to make progress on these key issues would make further improvements in prevailing market conditions unlikely and would have the potential to continue the headwinds for revenue growth, net interest margins and net new money," UBS said in a statement.
But the bank was confident its flagship private banking arm would still attract fresh inflows, an important indicator for future revenue.
UBS is scaling back its investment bank to focus on private banking. Bank Sarasin analyst Rainer Skierka said the results were a mixed bag of solid wealth management results, with the securities unit marred by the debt and other charges.
"Wealth management net new money and gross margins were slightly better than we might have expected post the Credit Suisse results, which arguably gives the results a better 'quality' feel than those of peers," Nomura analyst Jon Peace said. He rates UBS stock a "Buy."
Last week, Credit Suisse reported a slim profit for the quarter amid a better-than-expected showing from its fixed income division. UBS, under Chief Executive Sergio Ermotti, is shrinking its balance sheet to help meet Switzerland's tough new capital rules to make the country's banks more robust after the financial crisis.
A Reuters report contributed to this story