UBS' Wealth Management Hurdles

UBS' Wealth Management Hurdles

UBS has delivered first indications about what its newly-merged private bank will generate in terms of business. What this could mean is open for interpretation, a close look by finews.asia showed.

Switzerland’s largest bank announced the merger of its wealth management into a new global unit – Global Wealth Management, or GWM – two months ago. The latest quarterly report, released on Monday, provided figures for the combined division for the first time.

The new super-unit, with assets under management of more than two trillion Swiss francs ($2.05 trillion), serves the purpose of cutting costs and boosting revenue – in a business with eroding margins globally. Here are a few indications of where the company seems on the right track and where there is some way to go.

1. Net New Money and Assets Under Management

The merged private bank attracted 19 billion francs in net new money in the first three months of 2018. The U.S. business was the most successful. Assets under management however declined despite the inflow due to a decline in stock prices from the fourth quarter of 2017. The gross margin may have improved quarter-on-quarter, but dropped by 3 percentage points to 72 percent from a year ago.

Investors seem less than happy about the numbers presented on Monday and sold the stock with the share price falling.

2. Bank for the Super-Rich

GWM was also founded to better serve the so-called ultra-high net worth individuals, or UHNWIs. The cooperation across regions is intended to yield advantages for very wealthy clients, the thinking went.

It is too early to say whether the new mega-bank will attract more super-rich. UBS currently manages 611 billion francs in this segment. Pretax profit amounted to 238 million francs, one third up on the same period of last year. UBS didn’t give a comparison for the fourth quarter.

3. Lower Costs