GENEVA – Solid returns from its wealth management and investment banking divisions helped Switzerland’s biggest bank, UBS AG, post a 7 per cent profit advance in the first quarter.
But the bank, based in Zurich, sounded a cautionary note Tuesday about the global economy.
“The continued absence of sustained and credible improvements to unresolved issues in Europe, continuing U.S. fiscal and monetary policy issues, geopolitical instability and the mixed outlook for global growth would make improvements in prevailing market conditions unlikely,” it said.
Despite the challenges, UBS posted a first-quarter net profit of 1.054 billion Swiss francs ($1.2 billion), compared with 988 million francs in the same period 2013. The result was roughly in line with the 1.035 billion francs in the first quarter of 2012, marking a turnaround based on the streamlining it carried out in the wake of a series of lawsuits, scandals and a wave of restructuring.
“We demonstrated sustainable profitability across all business divisions and regions,” chief executive Sergio Ermotti said.
The bank’s capital cushion rose to 13.2 per cent, he said, representing “a major milestone” that surpasses the 2014 target.
The wealth management division’s operating profits before taxes rose 31 per cent from a year ago to 619 million francs. The investment banking’s operating profits before taxes were up 43 per cent to 425 million francs.
Also Tuesday, UBS rolled out a revamped corporate structure that involves swapping shares into a new group holding company. The plan is meant to allow the bank to compartmentalize its divisions more easily in case of trouble, to pay investors a special one-time dividend and to reduce how much money it must set aside for a capital cushion under Swiss rules.