Reported profit before tax (PBT) CHF 2.0bn, +17% YoY, +24% in USD
Adjusted1 RoTE excluding DTAs2 17.8%, diluted EPS CHF 0.39
CHF 1.1bn adjusted1 PBT in Global Wealth Management, +7% YoY, +14% in USD
CHF 50bn net new money in wealth and asset management businesses
CET1 capital ratio 13.1% and CET1 leverage ratio 3.76%
World's first 100% sustainable cross-asset portfolio for private clients launched
Zurich, 23 April 2018 – UBS delivered strong first-quarter 2018 results with reported PBT up 17% year over year to CHF 1,973m (up 24% in USD) and adjusted1 PBT down 3% to CHF 1,876m (up 3% in USD). Net profit attributable to shareholders was CHF 1,514m, up 19% from the first quarter of 2017.
Global Wealth Management had a very strong quarter with year-on-year profit growth and positive net new money in all regions. Adjusted1 PBT rose 7% year over year to CHF 1,126m (up 14% in USD), with new records in the Americas and Asia Pacific. Personal & Corporate Banking adjusted1 PBT was CHF 393m; transaction-based income and recurring net fee income increased, and net new business volume showed strong growth. Asset Management had strong net new money of CHF 27bn excluding money markets, taking invested assets to CHF 792bn, the highest in a decade; adjusted1 PBT was CHF 108m. The Investment Bank delivered a strong adjusted1 PBT of CHF 629m and an adjusted1 return on attributed equity of 25%, driven by strong revenues in Equities and Corporate Client Solutions. Corporate Center adjusted1 loss before tax was CHF 380m.
UBS’s capital position remains strong, with a CET1 capital ratio of 13.1%, a CET1 leverage ratio of 3.76% and total loss-absorbing capacity of CHF 79bn under Swiss SRB rules applicable as of 1 January 2020. Risk-weighted assets rose to CHF 254bn on increased market volatility during the quarter and regulatory, methodology and model updates/changes, while the leverage ratio denominator decreased to CHF 882bn. During the second quarter, UBS will commence buying back its shares under the program announced in the first quarter.
“We had an excellent start to 2018, with our results once again showing the power of our diversified business. Momentum in our business is good and we continue to invest for growth and efficiency.”
Sergio P. Ermotti, Group Chief Executive Officer
Outlook
We remain confident that global economic growth prospects will continue to provide a supportive backdrop to markets, even though geopolitical tensions and the rise of protectionism remain a threat to investor confidence.
All of UBS's businesses are affected by economic growth expectations, interest rates, equity market levels and foreign exchange rates. While higher compared with last year's historic lows, market volatility remains muted overall which is usually less conducive to client activity. Due to seasonal factors, second quarter transaction-based income in our Investment Bank and Global Wealth Management businesses is also typically lower than in the first quarter.
In the second quarter, funding costs related to long-term debt and capital instruments issued to comply with regulatory funding and liquidity requirements will be higher compared with the same period in 2017.
We continue to expect US dollar interest rates to rise gradually and the US economy to further improve, both of which will likely be supportive of US dollar net interest income. Momentum in our businesses is good, and we expect our results in the second quarter to provide further evidence of the strengths of our diversified business model, as well as our progress towards achieving our strategic and financial targets.
First quarter 2018 performance overview
UBS’s first quarter adjusted1 PBT was CHF 1,876m, and reported PBT was CHF 1,973m. The first quarter of 2018 included a gain of CHF 225m related to changes to the pension fund of UBS in Switzerland, which is treated as an adjusting1 item and had no impact on CET1 capital. Results were also adjusted1 for CHF 128m of restructuring expenses. The adjusted1 cost/income ratio was 75%. Net profit attributable to shareholders was CHF 1,514m, with diluted earnings per share of CHF 0.39. Annualized adjusted1 return on tangible equity excluding DTAs2 was 17.8%.
Global Wealth Management (GWM) adjusted1 PBT CHF 1,126m, +7% YoY (+14% in USD)
Higher invested asset levels and net interest margins, together with further progress on mandate penetration and loan growth, as well as increased client activity, led to an improvement in all revenue lines. Costs increased on higher financial advisor variable compensation, which was partly offset by lower expenses for compensation commitments with recruited financial advisors in the Americas. The adjusted1 cost/income ratio improved to 73%. Mandate and managed account penetration increased to a record 33.1% of invested assets, and loans increased by 10% (up 16% in USD). Net new money was CHF 19.0bn for the quarter, with positive contributions from all regions. Adjusted1 net margin was 19bps.
Personal & Corporate Banking (P&C) adjusted1 PBT CHF 393m, (10%) YoY
Transaction-based income and recurring net fee income increased, offset by funding cost and interest rate headwinds, as well as higher expenses. The first quarter of 2017 included a CHF 20m one-time gain on the sale of a real estate loan portfolio. Credit losses expenses were CHF 13m with no material effect from the adoption of IFRS 9, compared with a credit loss recovery of CHF 7m in the first quarter of 2017. The adjusted1 cost/income ratio was 58%. Annualized net new business volume growth for personal banking was 6.3%, the second best quarter since 2007.
Asset Management (AM) adjusted1 PBT CHF 108m, (12%) YoY
Increased net management fees on higher average invested assets were offset by lower performance fees and higher personnel costs. The adjusted1 cost/income ratio was 76%. Net new money excluding money market flows was strong at CHF 26.6bn, and invested assets reached CHF 792bn, the highest in a decade.
Investment Bank (IB) adjusted1 PBT CHF 629m, +13% YoY (+20% in USD)
Equities revenues were up 17% (up 25% in USD), with all regions and product lines improving. Corporate Client Solutions revenues increased 15% (up 22% in USD), driven by APAC. FX, Rates and Credit revenues were down 11% (down 6% in USD) from a strong first quarter of 2017. While performance in FX was resilient, market conditions for rates and credit flow products were challenging. Costs increased, reflecting higher personnel expenses as a result of improved performance. The adjusted1 cost/income ratio improved to 72%.
Corporate Center – Services recorded an adjusted1 loss before tax of CHF 147m. Group Asset and Liability Management adjusted1 loss before tax was CHF 222m, mainly due to the widening of US Treasury-OIS spreads, as well as increased retained costs from higher outstanding long-term debt and higher levels of high-quality liquid assets. Non-core and Legacy Portfolio posted an adjusted1 loss before tax of CHF 11m.
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