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- Commercial Real-Estate Woes Run Deeper Than in Past Downturns The Wall Street Journal
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Tag Archives: UBS
European bank CoCos under pressure after Credit Suisse sale to UBS triggers historic loss on specialty bonds – MarketWatch
- European bank CoCos under pressure after Credit Suisse sale to UBS triggers historic loss on specialty bonds MarketWatch
- Asia’s regulators say banking system is robust and stable after UBS-Credit Suisse takeover deal CNBC
- FOREX Safe-haven yen rises as investors assess Credit Suisse rescue Reuters
- The $275 billion bank convertible bond market thrown into turmoil after Credit Suisse’s securities wiped out MarketWatch
- Fidelity, Invesco, Lazard funds take hit from Credit Suisse AT1 bond write-down as lawyers line up claims Financial News
- View Full Coverage on Google News
UBS earnings Q4 and FY 2022
UBS reported fourth quarter and full-year earnings.
Fabrice Coffrini | Afp | Getty Images
UBS beat market expectations with its latest results on the back of lower expenses and higher interest rates. But the lender’s revenues declined because of weaker client activity.
The bank reported $1.7 billion of net income for the fourth quarter of last year, bringing its total annual profit to $7.6 billion in 2022. Analysts had expected UBS would achieve a net income of $1.3 billion in the fourth quarter and of $7.3 billion for the year, according to Refinitiv data.
Looking ahead, the Swiss lender said that revenues for the first quarter of 2023 are set “to be positively influenced” by higher client activity and interest rates, as well as by the easing of Covid-19 restrictions in Asia.
“We delivered good full-year and solid fourth-quarter results in a difficult macroeconomic and geopolitical environment,” CEO Ralph Hamers said in a statement.
Here are a couple of highlights from the latest release:
- CET 1 capital ratio, a measure of bank solvency, stood at 14.2%, down from 14.4% in the previous quarter;
- Revenues dropped to $8.029 billion from $8.705 billion a year ago;
- Return on tangible equity, a measure of bank’s performance, rose to 13.2% at the end of the quarter, up from 10% a year ago.
Among the bank’s units, Global Wealth Management posted a fourth-quarter net interest income increase of 35% on the year, given higher deposit margins off the back of higher interest rates. Personal and Corporate Banking also recorded a 21% year-on-year hike in net interest income over the same period, as a result of higher interest rates and loan revenues.
But market uncertainty hit the investment banking and asset management arms of the business. The former saw a 24% yearly drop in revenues, whereas asset management revenues fell by 31% year-on-year due to the “negative market performance and foreign currency effects.”
“The rate environment is helping the business on one side, and that offsets some of the lower activity that we see on the investment side,” Hamers told CNBC’s Geoff Cutmore on Tuesday.
He added that, following the first half of last year, there was a shift in the markets that put pressure on the investment side of the bank.
“We saw a move from what we would call micro focus, which is equity focused, to macro focus, which is rates focused,” he said, noting that the Swiss bank was not able to benefit from that transition as much as some of its peers, given its smaller presence in the U.S.
‘Uncertain’ Outlook
UBS said it will be purchasing more shares this year.
“We remain committed to a progressive dividend and expect to repurchase more than $5 billion of shares in 2023,” Hamers said in a statement.
However, the Swiss bank is cautious about the economic outlook, citing central bank activity as a potential catalyst for market volatility.
“While inflation may have peaked in the second half of 2022, and an energy crisis in Europe seems likely to be averted, the outlook for economic growth, asset valuations and market volatility remains highly uncertain, and central bank tightening may have an impact on market liquidity,” the bank said in its latest results.
UBS shares are up by about 15% over the last 12 months.
UBS earnings Q3 2022
UBS reports its latest earnings
FABRICE COFFRINI | AFP | Getty Images
UBS on Tuesday reported a net income of $1.7 billion for the third quarter of this year, slightly above analyst expectations, with the Swiss bank citing a challenging environment.
Analysts had expected a net profit of $1.64 billion, according to Refinitiv data. UBS reported a net income of $2.3 billion a year ago.
The Swiss lender had missed expectations in the last quarter when it posted a net profit of $2.108 billion. The bank said at the time the second quarter had been “one of the most challenging periods for investors in the last 10 years” due to high inflation, the war in Ukraine and strict Covid-19 policies in Asia.
UBS said Tuesday these factors continued to be in investors’ minds in the third quarter.
“The macroeconomic and geopolitical environment has become increasingly complex. Clients remain concerned about persistently high inflation, elevated energy prices, the war in Ukraine and residual effects of the pandemic,” Ralph Hamers, CEO of UBS, said in a statement.
Other highlights for the quarter include:
- Revenues hit $8.3 billion, down from $9.1 billion a year ago.
- Operating expenses dropped to $5.9 billion, from $6.2 billion a year ago.
- CET 1 capital ratio, a measure of bank solvency, reached 14.4% versus 14.9% a year ago.
Its investment banking division saw revenues down by 19% with the lower performance in equity derivatives, cash equities, and financing revenue being offset by revenues in foreign exchange. The Global Wealth Management division also reported lower revenues, down by 4% year-on-year.
However, Personal and Corporate Banking revenues rose over the same period on more beneficial rates from the Swiss National Bank.
Shares of UBS are down about 8% so far this year.
Wall Street to Pay $1.8 Billion in Fines Over Traders’ Use of Banned Messaging Apps
WASHINGTON—Eleven of the world’s largest banks and brokerages will collectively pay $1.8 billion in fines to resolve regulatory investigations over their employees’ use of messaging applications that broke record-keeping rules, regulators said Tuesday.
The fines, which many of the banks had already disclosed to shareholders, underscore the market regulators’ stern approach to civil enforcement. Fines of $200 million, which many of the banks will pay under the agreements, have typically been seen only in fraud cases or investigations that alleged harm to investors.
But the SEC, in particular, has during the Biden administration pushed for fines that are higher than precedents, saying it wants to levy fines that punish wrongdoing and effectively deter future potential harm. The SEC’s focus on record-keeping is likely to be extended next to money managers, who also have a duty to maintain written communications related to investment advice.
Last month, the SEC alleged that hedge-fund manager Deccan Value Investors LP and its chief investment officer failed to maintain messages sent over
Apple
iMessage and WhatsApp. In some cases, the chief investment officer directed an officer of the company to delete their text messages, the SEC said. The claims were included in a broader enforcement action, which Deccan settled without admitting or denying wrongdoing.
The Wall Street Journal reported last month that the settlements announced Tuesday were likely to top $1 billion and would be announced before the end of September.
Eight of the largest entities, including Goldman Sachs and Morgan Stanley, agreed to pay $125 million to the SEC and at least $75 million to the CFTC. Jefferies will pay a total of $80 million to the two market regulators, and
Nomura
NMR -1.20%
agreed to pay $100 million. Cantor agreed to pay $16 million.
The SEC said it found “pervasive off-channel communications.” In some cases, supervisors at the banks were aware of and even encouraged employees to use unauthorized messaging apps instead of communicating over company email or other approved platforms.
“Today’s actions—both in terms of the firms involved and the size of the penalties ordered—underscore the importance of recordkeeping requirements: they’re sacrosanct. If there are allegations of wrongdoing or misconduct, we must be able to examine a firm’s books and records to determine what happened,” said SEC Enforcement Director
Gurbir Grewal.
Bank of America, which faced the highest fine from the CFTC, had a “widespread and long-standing use of unapproved methods to engage in business-related communications,” according to the CFTC’s settlement order. One trader wrote in a 2020 message to a colleague: “We use WhatsApp all the time, but we delete convos regularly,” according to the CFTC.
One head of a trading desk at Bank of America told subordinates to delete messages from their personal devices and to communicate through the encrypted messaging app Signal, the CFTC said. The head of that trading desk resigned this year, although the bank was aware of his conduct in 2021, the CFTC said.
At Nomura, one trader deleted messages on his personal device in 2019 after being told the CFTC wanted them for an investigation, the agency said. The trader made false statements to the CFTC about his compliance with the records request, the regulator said.
Broker-dealers have to follow strict record-keeping rules intended to ensure regulators can access documents for oversight purposes. The firms settling with the SEC and CFTC admitted their employees’ conduct violated those regulations.
JPMorgan Chase
& Co.’s brokerage arm was the first to settle with the two market regulators over its failure to maintain required electronic records. JPMorgan paid $200 million last year and admitted some employees used WhatsApp and other messaging tools to do business, which also broke the bank’s own policies.
Regulators discovered that some JPMorgan communications, which should have been turned over for separate enforcement investigations, weren’t collected because they were sent on employees’ personal devices or apps that the bank didn’t supervise.
Write to Dave Michaels at dave.michaels@wsj.com
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UBS misses second-quarter earnings expectations; CEO cites ‘uncertain times’
UBS on Tuesday missed expectations for the second quarter of 2022 as its wealth management and investment banking divisions saw falling client activity on the back of the global market downturn.
The Swiss bank posted a net profit attributable to shareholders of $2.108 billion, below analyst expectations aggregated by the company of $2.403 billion.
It marks a 5% rise from the $2 billion reported during the same period last year, when the flagship wealth management business saw a significant windfall from wealthy investors, and follows a strong first-quarter that saw the group post a net profit of $2.136 billion.
“The second quarter was one of the most challenging periods for investors in the last 10 years. Inflation continues to be high, the war in Ukraine is ongoing, as are strict Covid policies in parts of Asia,” UBS CEO Ralph Hamers said in a statement. “In these uncertain times, our clients rely on our powerful ecosystem to navigate markets and invest for the long term.”
Other highlights for the quarter:
- Total revenues hit $8.917 billion, compared to $8.897 billion for the same period last year.
- Return on tangible equity stood at 16.4%, versus 15.4% a year ago.
- CET 1 capital ratio, a measure of bank solvency, reached 14.2% versus 14.5% in the second quarter of 2021.
Investment banking revenues slide
Investment banking revenues came in at $2.094 billion, down 14% from the same period last year.
In its report, the bank highlighted a $1.121 billion fall in net fee and commission income, mainly reflecting a “decrease in underwriting fees, particularly in Equity Capital Markets, and a decrease in net brokerage fees due to lower levels of client activity in Global Wealth Management and the Investment Bank.”
“Investment fund fees decreased, reflecting negative market performance and lower performance fees, and revenues from merger and acquisition transactions also decreased,” the report added.
The logo of Swiss banking giant UBS.
Fabrice Coffrini | AFP | Getty Images
As market declines accelerated across equity and fixed income in the second quarter, the bank’s wealth management division saw muted net new fee-generating assets of around $400 million globally, though inflows were $3 billion net positive in Asia-Pacific.
The asset management business also saw $12 billion of outflows, primarily from equities.
“Institutional clients remained active on the back of high volatility. We supported them with advice and execution while handling very high volumes,” CEO Hamers said in a statement.
“At the same time, private clients stayed on the sidelines. We continued to support them with deposits and loan offerings, both of which saw particularly robust year-on-year growth in the Americas.”
UBS on how to invest in EVs, rising electric vehicle adoption
UBS sees gold prices falling to $1,600 by the end of 2022
Gold prices have been buoyed in recent weeks as investors seek safe-havens amid fears of Russia invading Ukraine, but in the longer term, UBS Investment Bank’s Joni Teves predicts that recent strength in gold prices will be “short-lived.”
She spoke to CNBC on Monday, before Russian President Vladimir Putin ordered forces into two breakaway regions of eastern Ukraine, after he announced the Kremlin will recognize their independence.
Spot gold recently crossed the $1,900 level, last sitting at $1,908.13 per ounce in the morning of Asia trading hours on Tuesday. That’s sharply higher than levels around $1,800 seen in early February.
The latest escalation in Ukraine raised doubts over the potential for a diplomatic resolution to the ongoing crisis. U.S. President Joe Biden has since ordered sanctions on the separatist regions of Ukraine, with the European Union also vowing additional measures.
Gold is traditionally seen as a safe investment during times of uncertainty.
Looking ahead, Teves said the gold market is expected to revert back to focusing on macro drivers such as real rates, U.S. Federal Reserve policy as well as the growth outlook. In fact, UBS sees gold prices falling to $1,600 per ounce by the end of 2022.
“An environment where real rates are rising and the Fed is tightening policy does provide a negative backdrop for gold,” she said. “We do think that the strength should ultimately … be short-lived.”
As the end of the current quarter approaches, the Fed is widely expected to raise interest rates at its March meeting to cool inflationary pressures, and Teves said that’s likely to put pressure on gold.
Expectations for higher interest rates tend to push yields of assets such as U.S. Treasurys higher, potentially lowering the attractiveness of a non-yielding asset such as gold.
Still, she acknowledged that the upside risks for gold are rising.
“I think the key risk here is if we start to see reallocation into gold, with the expectation that although real rates are moving higher they are likely to remain in negative territory, and therefore an allocation to gold remains attractive,” the strategist said.
Furthermore, allocations to gold could start to rebuild as investors grow more concerned about economic growth slowing down as the Fed tightens policy, she said.
UBS Q4 earnings 2021
LONDON — UBS on Tuesday reported a fall in quarterly profit, but beat analyst expectations and set ambitious new profitability targets as part of a strategic update.
The Swiss bank posted net profit attributable to shareholders of $1.35 billion for the fourth quarter. This was down from $1.64 billion a year earlier, and also lower than the $2.28 billion reported the previous quarter.
Analysts had forecast UBS to post net income attributable to shareholders of $863 million, according to the consensus published by the bank.
The figures take the bank’s full-year profit to $7.46 billion, above a company-compiled consensus of $6.98 billion.
However, UBS’ bottom line was hit by an increase of $740 million in litigation provisions for a French cross-border tax case. In late December, the bank filed an appeal with France’s Supreme Court against a decision by a Paris appeals court to uphold a money laundering conviction.
Here are other highlights for the third quarter:
- CET 1 ratio, a measure of bank solvency, reached 15.0% versus 14.9% in the previous three months.
- Operating income came in at $8.73 billion versus $9.1 billion in the previous quarter.
- Return on equity, a measure of financial performance, stood at 8.9% from 15.3% in the third quarter of 2021.
New targets
“We are aiming to create sustainable value through the cycle. Reflecting our improved operating performance over the last two years, we have updated our financial targets, while our capital guidance remains unchanged,” the bank said in a statement accompanying the results.
In its first major strategic update since CEO Ralph Hamers took the reins in Nov. 2020, UBS said it will aim for $6 trillion in invested assets across its global wealth management, asset management and personal and corporate banking divisions.
Meanwhile the bank set the target range for its return on CET1 capital at 15-18% and cost-to-income ratio at 70-73%. The bank will also aim for 10-15% growth in profit before tax at its wealth management business.
“Our new aspirations, targets and goals will position us to live up to our purpose, better serve clients, deploy technology in differentiated and impactful ways, and open our ecosystem for new and existing clients,” CEO Ralph Hamers added in a statement.
UBS proposed a dividend to shareholders of 50 cents per share for 2021, rising from 37 cents in 2020, and aims to buy back $5 billion worth of its own shares in 2022. Buybacks offer a way for firms to return cash to shareholders — along with dividends — and usually coincide with a company’s stock pushing higher as shares get scarcer.
This is a breaking news story and will be updated shortly.
Credit Suisse’s António Horta-Osório Lost Board Support Over Covid-19 Rules Breach
He came to fix
Credit Suisse Group AG’s
broken culture. Then he became part of the problem.
António Horta-Osório
was hoping for a slap on the wrist Sunday from the
Credit Suisse
CS 0.38%
board for breaking coronavirus quarantine rules on trips to events, according to people familiar with his departure. Instead, he had to leave his job as the bank’s chairman for not upholding the high standards he set when joining Credit Suisse eight months ago.
Mr. Horta-Osório had to leave after most members of the board refused to back him at a meeting that ran late into the Zurich evening, ending weeks of attempts by the bank to contain its latest crisis. A bank probe into Mr. Horta-Osório’s travel found he had breached quarantine rules in England and Switzerland since starting at Credit Suisse, including to attend the Wimbledon tennis final in July.
The Portugal-born banker also used private aircraft hired by Credit Suisse to combine personal travel and work trips that made some on the board uncomfortable, according to people familiar with the matter.
Credit Suisse found Chairman António Horta-Osório had breached quarantine rules in England and Switzerland.
Photo:
Chris J. Ratcliffe/Bloomberg News
A spokesman for Mr. Horta-Osório said the jet use was “in line with that of his predecessor in the role and actually similar to other senior colleagues in the bank. It was also never used without a business-related reason and this has been confirmed by an internal audit.”
Some members of the board were concerned Mr. Horta-Osório was no longer credible with employees or customers to fix what had come to be seen as a broken culture at the bank around risk taking, the people familiar with the matter said.
The sudden departure adds to a nightmarish stretch for the bank. In February 2020, Chief Executive
Tidjane Thiam
was ousted by the bank’s board for failing to contain the reputational fallout from a scandal that involved some staff being followed by private investigators. Then last year it was hit by twin crises, with the collapse of clients Greensill Capital and Archegos Capital Management.
Axel Lehmann,
Mr. Horta-Osório’s successor as chairman, who was appointed on Sunday, has been vetted by Switzerland’s financial regulator, having joined Credit Suisse’s board in October after working at rival
UBS Group AG
for more than a decade.
Mr. Lehmann is described by people who have worked with him as an archetypal Swiss professional, with a pleasant demeanor and tough interior. An attribute he brings to the role is a high-functioning relationship with Swiss regulators and other power brokers in the country, some of the people said.
Mr. Horta-Osório’s departure makes him one of the biggest casualties of coronavirus rule breaches. Two Canadian executives resigned from their posts last year after traveling to get vaccinated. Separately, the head of a Canadian pension fund resigned after The Wall Street Journal reported he traveled to the Middle East to get an early vaccine dose.
In December, Mr. Horta-Osório apologized to board members—and publicly—for leaving Switzerland when he was supposed to be in quarantine after a trip to London. He said it was inadvertent. He also apologized to board members for using private aircraft hired by Credit Suisse to stop off for a vacation in the Maldives on the way back from a work trip, people familiar with the trip said. His stance was that the travel complied with company rules, according to some of the people.
The deterioration in some on the board’s trust escalated after Reuters reported in late December on Mr. Horta-Osório’s Wimbledon trip and quarantine breach, according to some of the people. In the new year, the board’s audit committee reviewed a report into his travel and the quarantine breaches, and Credit Suisse started preparing for Mr. Horta-Osório’s possible departure, according to some of the people familiar with the matter.
Mr. Horta-Osório attended Wimbledon’s tennis finals believing a waiver from England’s quarantine rules had been arranged for him by Credit Suisse, his spokesman said. Mr. Horta-Osorio attended the tournament with members of his family and a bank adviser after Credit Suisse clients canceled, he said.
The timing of the missteps struck a nerve with many Credit Suisse employees, and the order-minded Swiss public. Swiss media compared Mr. Horta-Osório’s conduct to that of British Prime Minister
Boris Johnson
and tennis star Novak Djokovic, who fanned anger this year for appearing to be unfettered from national coronavirus restrictions.
Credit Suisse is an elite banking brand abroad, but at home in Switzerland has household and business customers of all sizes as the country’s No. 2 bank by assets. Having the top person failing to comply with Swiss rules was seen as an unacceptable situation, according to some of the people familiar with the matter.
One of the people familiar with the matter said Mr. Horta-Osório attended Sunday’s meeting hoping to be fully supported by the board, which includes recent appointments he made. The chairman resigned when it became apparent he didn’t have enough support.
Mr. Horta-Osório was supposed to save Credit Suisse from being scandal-prone. He received a British knighthood for his last job turning around the U.K.’s
Lloyds Banking Group PLC,
adding to civil awards in Spain, Brazil and Portugal. People who have worked with him said he is demanding, exacting and takes his reputation seriously.
He agreed in late 2020 to join Credit Suisse as its chairman, a prestigious role in Switzerland for an institution that dates to 1856. The idea was it would be his main job alongside several other board mandates, to ease into a less-stressful existence than running Lloyds, according to people familiar with his planning.
Mr. Horta-Osório’s tenure at Lloyds wasn’t without drama. Eight months into that job, in 2011, he took a two-month hiatus to check into a rehabilitation clinic suffering from exhaustion. Then, in 2016, he apologized to Lloyds staff after the Sun newspaper published photographs of Mr. Horta-Osório, who is married with three children, with another woman during a work trip to Singapore. He said he regretted the adverse publicity and damage to Lloyds’s reputation. He said he paid for any personal expenses on the trip.
A few weeks before his April 30 start date, Credit Suisse incurred a loss of more than $5 billion when Archegos, a family investment firm led by
Bill Hwang,
defaulted on large stock positions.
Mr. Horta-Osório sought to reset the risk button, shedding the bulk of Credit Suisse’s unit servicing hedge funds and centralizing oversight at its main units. He exhorted employees to be more personally responsible and accountable for their actions, and, according to people familiar with the matter, put Chief Executive
Thomas Gottstein
and other top executives on notice to hit the top of their game or leave.
Write to Margot Patrick at margot.patrick@wsj.com and Emily Glazer at Emily.Glazer@wsj.com
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