UBS 1Q Surpasses Views in Challenging Environment – Earnings Review

By Cristina Roca


UBS Group AG released its first quarter results on Tuesday morning. Here’s what we looked at:


NET PROFIT REVIEW: UBS reported quarterly net profit of $2.14 billion, up from $1.82 billion a year earlier and a consensus estimate provided by the company of $1.79 billion.


OPERATING REVENUE REVIEW: Operating income for the quarter was $9.36 billion, up 8% year-on-year. Analysts had expected the Swiss bank to post an operating profit of $8.83 billion, according to the same consensus.


WHAT WE WATCHED:

-IMPROVING INVESTMENT BANKING: UBS’s impression of beating expectations was boosted by an increase in client transactions at its investment bank, mirroring a trend seen among its US peers. Overall, the company appears to have held up well in a challenging environment, Deutsche Bank analysts Benjamin Goy and Sharath Kumar Ramanathan said in a research note. “That will probably only become more evident with reports from European peers,” DB said.

-WEALTH MANAGEMENT: While investment banking performed very well, revenue from UBS’s key wealth management division fell short of expectations, DB said. UBS said transaction-based revenue fell, primarily due to lower client activity, particularly in the Asia-Pacific region. However, the unit should benefit from rising US interest rates. The bank expects an increase of about $1 billion in net interest income for the rest of the year, with most of the increase taking part in the second half, Chief Financial Officer Kirt Gardner said. said during a presentation of the results.

-RUSSIA HIT: The company reported an impact of approximately $100 million on its profit and loss accounts due to its exposure to Russia. He said he reduced his exposure to the country to $400 million at the end of March, from $600 million at the end of 2021.


Write to Cristina Roca at [email protected]