UBS Private Bank's Stealth Decline

UBS, Juerg Zeltner, private bank, stealth decline, Q3

UBS has posted its seventh consecutive quarter of falling income from private banking. The antidote until now has been cost-cutting. Is it enough?

Nobody envies UBS private banking head Juerg Zeltner right now: his unit, upon which the Swiss bank has built its long-term strategy, faces an uphill battle – and one that is only accentuating.

He has said that UBS must temper its profit expectations (in German), and effectively rebuffed net new money.

Crumbling Since 2015

Wealth management posted a 634 million Swiss franc pretax profit in the third quarter. This is slightly better sequentially, but the larger picture makes it clear that the third quarter is the latest in a series of lackluster results from the unit.

UBS Profit

The fact is that UBS has earned less and less from its core business in seven quarters running. The most recent highlight was the first quarter of last year when UBS took in 2.1 billion in income. Since then, the bank has been in a downward spiral, slowly but surely moving lower on revenue and profitability.

UBS Erloese

The picture is similar with margins, where UBS has lost 10 basis points compared to the highlight first-quarter of last year – a relentless erosion.

UBS Margen

UBS hasn't exactly been wrong-footed by these developments, and has been struggling to keep pace by slashing costs quarter for quarter. Zeltner has cut staff in particular, a process he says will continue.

Banking = Cost-Cutting

The developments illustrate a truism in banking today, and in particular private banking: cost-cutting has been a key factor to succeed.

UBS wants to lower its total spending by 2.1 billion francs, and has already reached 1.5 billion of that.

Client Behavior

The problem at UBS and other private banks is that regulatory costs are piling up more quickly than expected and clients are still reticent about putting big money bets on the table.

Regulatory spending is expected to eventually peak, but there is no improvement in sight for the lack of client activity.

Cost cuts only go so far towards improving profitability. UBS will inevitably have to face the question of how its flagship business should be organized in order to be sustainably profitable in the future.

WEB'S BEST

Top stories from across the globe

  • Asia Pacific's Top Six Credit Risks For 2017
  • The 5 Most Shocking News in 2016
  • Hazel Moore: Banks Are Completely Wasting Valuable Customer Data
  • Morgan Stanley CEO Makes First-Ever Stock Sales After Bank Rally
  • Former Goldman's Partner in Boutique Venture
  • Hong Kong and Singapore in Push for Fee Transparency
More

PHOTO GALLERIES

finews.asia Networking Event

finews.asia Networking Event

Show pictures

stars China Symposium 2016

stars China Symposium 2016

Show pictures

Compare my salary

Compare my salary

Feeling Underpaid? Benchmark your salary by job title, company and location. Find out where you stand in minutes.

compare my salary

Newsletter

Newsletter-SymbolFree Subscription

Subscribe to our free newsletter and receive daily email alerts from the finews editorial team with a list of the top featured articles.

Share with us

Do you have any market intelligence to share with finews.asia – email us on info@finews.asia – All communication is completely confidential and strictly anonymous.