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UBS’s first-quarter 2023 results

Zurich25 Apr 2023, 06:45 CEST

1Q23 net profit of USD 1.0bn, with strong client inflows

Ad hoc announcement pursuant to Article 53 of the SIX Exchange Regulation Listing Rules

Solid underlying results and strong liquidity and capital amid uncertain market conditions

On a reported basis, and including an increase in provisions of USD 665m related to the US residential mortgage-backed securities (RMBS) litigation matter, 1Q23 PBT was USD 1,495m (-45% YoY). Net credit loss expenses were USD 38m, compared with net expenses of USD 18m in 1Q22. Total revenues decreased 7% YoY, while operating expenses increased 9%, driven by the aforementioned provision. The cost/income ratio was 82.5%. Net profit attributable to shareholders was USD 1,029m (-52% YoY), with diluted earnings per share of USD 0.32. The return on CET1 capital was 9.1%.

On an underlying basis, 1Q23 PBT was USD 2,354m, (-22% YoY). Underlying revenues decreased 8% YoY, while operating expenses decreased 2%, or 1% when excluding FX. The cost/income ratio was 72.8% and the return on CET1 capital was 16.5%.

In the quarter, we repurchased USD 1.3bn of shares under our share repurchase program. We have temporarily suspended share repurchases following the announcement of the anticipated acquisition of Credit Suisse, and we intend to resume them as soon as possible.

Our capital position remained strong. The quarter-end CET1 capital ratio was 13.9% and the CET1 leverage ratio was 4.40%, both in excess of our guidance of ~13% and >3.7%, respectively. We also maintained healthy liquidity buffers with an LCR of 162% and an NSFR of 118%. Continued client momentum with inflows in all regions

In the first quarter, we maintained positive momentum across the firm and attracted USD 28bn of net new money in GWM, of which USD 7bn came in the last ten days of March, after the announcement of our acquisition of Credit Suisse. We also saw USD 20bn in net new fee-generating assets1 in GWM, USD 14bn of net new money in AM (of which USD 18bn in money market), and CHF 0.9bn of net new investment products for Personal Banking. Overall, we saw broadly stable loan balances2 as loan growth in Switzerland offset deleveraging in other regions. As clients repositioned their investments in response to interest rate increases, we captured demand for higher yield into money market funds and US-government securities.

We delivered these results during a quarter characterized by persistent concerns about interest rates and economic growth exacerbated by questions about the stability of the banking system, especially in the US. Against this backdrop, private and institutional investors’ activity remained muted.

In Americas, GWM attracted net new fee-generating assets1 of USD 4bn, with continued positive momentum in our SMA3 offering, which contributed USD 4.5bn of net new money in AM. In the quarter we also saw USD 8bn net new money in GWM, and continued momentum in advisor recruiting.

In Switzerland, we saw USD 8bn net new fee-generating assets,1 USD 2bn net new loans in GWM and P&C combined and USD 0.9bn net new investment products for Personal Banking (16% annualized growth).

In EMEA, we generated USD 3bn of net new fee-generating assets1 and net interest income rose by nearly 60% as we started to benefit from higher euro rates. We were also named best equities bank in EMEA4 and Europe financial bond house for the year.5

In APAC, we attracted USD 5bn of net new fee-generating assets1 contributing to a 17% net new fee-generating asset growth over the past 12 months, and we were recently named the best equity house in Asia and ANZ6 and best M&A bank in APAC by Global Finance.

Enhancing client franchises through the announced acquisition of Credit Suisse

We expect the combination with Credit Suisse to strengthen our position as a leading and truly global wealth manager, with around USD 5trn in invested assets. We also expect to reinforce our position as a leading universal bank in Switzerland, and to enhance our complementary investment banking and asset management capabilities, while adding strategic scale in the most attractive growth markets.

We intend to actively reduce the risk and resource consumption of Credit Suisse’s investment banking business. We plan for the combined Investment Bank (excluding assets and liabilities that we define as non-core) to account for around 25% of Group RWAs and to remain focused and strategically aligned to the products and capabilities that are most relevant to our wealth management clients.

While acknowledging the magnitude of, and complexity associated with, the integration and restructuring of Credit Suisse, we believe that this combination presents a unique opportunity to bring significant, long-term value to all of our stakeholders.

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