The three key USB logo will be seen outside the London office of Swiss Bank UBS in central London on March 20, 2023.
Daniel Real | AFP | Getty Images
Swiss giant UBS on Wednesday beat its final forecast amid a sharp return from investment banks, warning the impact of global trade in sweeping US tariffs that seek to curb a sharp decline in share.
Net income attributable to shareholders reached $169.2 billion in the first quarter. Stretch’s group revenue was $12.5557 billion, while analysts forecasted $129.9 billion.
Includes other first quarter highlights.
Tangible Equity’s return reached 8.5%, reaching 3.9% in the fourth quarter. CET1 capital ratio is a measure of bank solvency, at 14.3% since the December quarter.
The lender said it provided a 32% year-on-year increase in revenues for the global market unit of the investment banking sector. It is mainly driven by “higher stock client activity and FX that benefits in all regions.”
Significantly, lenders recorded $1.629 billion in net interest income (NII) (NII) – the difference between loans, investments and deposit payments fell 16% year-on-year and 11% from the fourth quarter, leading to a further decline in the June quarter.
“In the second quarter, Global Wealth Management’s Net Interest Revenue (NII) is expected to fall in order at a single-digit lower percentage, with a similar decline in Swiss franc individuals and corporate banking NIIs. Under the US dollar terms, NIIs in personal banks and corporate banking are expected to rise sequentially at a rate lined up based on current foreign exchange rates.
Investors are eager to look at these metrics, particularly as European banks move into an environment of currency easing.
UBS on Wednesday confirmed it has completed its $500 million share repurchase and aims to drive a plan for the remaining $2.5 billion in 2025.
Customs tariff outlook
UBS, which abdicated this month as the largest bank in continental Europe due to market capitalization by Banco Santander, suffered a decline in shares of about 10% over the year as it was recorded to the brunt of losses recorded after the White House tariffs on its global trading partners on April 2.
Switzerland faces a 31% obligation if it fails to agree to a more reconciliatory trade agreement by the end of Washington’s 90-day grace period in early July. In comparison, the European Union reached 20% in US taxes.
The tensions with Washington and the prospect of a potential recession for the world’s biggest economy are a trouble spell for the Swiss banking giant and the global wealth management sector that supports its money, with about half of UBS’s investment assets concentrated in the wider US region last year.
“The rapid and substantial changes to trade tariffs, increased risk of escalation and significant macroeconomic uncertainty have led to significant market volatility in the first few weeks of April,” UBS said Wednesday. “The economic pathways moving forward are particularly unpredictable due to the wide range of possible consequences. The outlook for increasing tariffs on global trade poses a significant risk to global growth and inflation, clouding the outlook for interest rates.”
It flagged the possibility of a “further surge in volatility” as the market remains sensitive to new, tariff-driven developments.
UBS’s long-term profitability photo is bleaked by questions about potential, tougher, more stringent capital requirements from Swiss authorities who questioned the “too big for failure” status of Swiss Titan. One politician at the time, dubbed the “Trade of the Century,” pushes UB into the path of maximum resistance to further restrictions, claims that the deal undermines its competitiveness as an already well-capitalized entity.
“UBS’s lobbying is visible and unmistakable. It clearly resonates in a variety of places. But once again, the Federal Council cannot be threatened by lobbying, but it must represent the interests of taxpayers.”
“The Federal Council has one goal. In the event of a crisis, systematically important UBS can be resolved. This means that systematically important parts of the bank can be separated in Switzerland. That must be the goal of the Federal Council and the new law.”
