UBS has had a difficult first quarter, with profit down from the fourth quarter and below analysts' expectations. Wealth management remains one of the few highlights.

Profit attributable to shareholders in the first three months of 2016 dropped to 707 million francs from 949 million in the fourth quarter, UBS said in a statement today. Analysts on average expected profit to be about 100 million higher.

«The resilient results we delivered in challenging market conditions reflect our discipline and focus, as well as our diversified business model,» said UBS Chief Executive Sergio Ermotti in the statement. «In view of exceptionally low client activity levels, we continued to manage our resources effectively while making progress on costs.»

Strong Performance by Wealth Management

The wealth-management business of UBS surprised with a strong inflow of net new money – reaching 15.5 billion francs. Growth was driven by Asia and the ultra-high-net-worth segment, UBS said. The strong inflow surprises because Switzerland's biggest bank in the fourth quarter of 2015 had to report a net outflow.

The unit had a pretax profit of 636 million francs, 131 million more than in the previous quarter, and despite the lowest-ever transaction volume in a first quarter.

The Investment Bank had a quarterly pretax profit of 370 million francs, up from 223 in the fourth quarter of 2015. Asset Management had a pretax of 110 million, down from 153 million.

UBS achieved 1.2 billion francs of total cost savings compared with full-year 2013 and is on course to achieve its target of 2.1 billion net cost reductions by year end 2017, the company said.

Unresolved Risk Aversion

The outlook at UBS remains dominated by uncertainties. «Negative market performance, substantial volatility, as well as underlying macroeconomic and geopolitical uncertainty, led to more pronounced client risk aversion and abnormally low transaction volumes in the first quarter,» the bank said. «Some of these factors have stabilized recently, but the underlying macroeconomic challenges and geopolitical risks highlighted previously continue to contribute to client risk aversion and are unlikely to be resolved in the foreseeable future.»