The Swiss bank has seen revenues in its equity derivatives business down despite increases in other asset classes.

Global markets revenues at the Swiss bank dropped 11% to US$1.35 billion in Q4 22 year-on-year as the derivatives & solutions unit underperformed.

Revenues at the markets division fell 13% to US$541m year-on-year (YoY) due to 'lower client activity in equity derivatives, partly offset by increases in FX, rates and credit (FRC)', according to the Swiss bank’s Q4 22 earnings report.

Groupwide, total revenues fell eight percent to US$8.03 billion, but net profit rose 23% to US$1.65 billion in Q4 22 compared with the prior-year period

Within the segment, execution services revenues declined 18% to US$371m because of lower volumes in Apac and Emea - financing was down two percent due to lower revenues in equities financing, partly offset by increases in clearing.

By asset class, equities declined 20% to US$883m while FRC grew 13% to US$468m benefiting from 'elevated volatility due to inflationary concerns and the actions of central banks' at the global markets in Q4 22 YoY.

The bank headed by CEO Ralph Hamers (pictured) also reported a 52% fall in global banking revenues to US$331m as the advisory and capital markets units posted a respective decline of 12% and 68% YoY.

Overall, revenues at the investment bank division were down 24% to US$1.68 billion in Q4 22 compared with the prior-year period. Meanwhile, operating expenses were up one percent to US$1.56 billion, which led to an 84% decline for profit before tax amounting to US$112m at the division. 

The revenues decline was also seen in the global wealth management and asset management divisions. The former posted US$4.60 billion in Q4 22, down five percent; the latter recorded US$495m, down 31% YoY, reflecting 'lower net management fees' and 'lower performance fees mainly in [its] hedge fund businesses.'

The bank’s personal & corporate banking division was the only business unit delivering growth with revenues increasing by 10% to US$1.08 billion during the same period.

Groupwide, total revenues fell eight percent to US$8.03 billion, but net profit rose 23% to US$1.65 billion in Q4 22 compared with the prior-year period. On a full-year basis, revenues decreased two percent to US$34.56 billion compared with 2021 while net profit increased two percent to US$7.63 billion.

Structured products

UBS has seen its activity in the US plunge over the past year with its sales volume of retail structured products hitting a record low in Q4 22.

The Swiss bank issued 574 retail structured products worth US$1.0 billion in the US market in Q4 22. The sales volume was more than halved YoY, representing a 21.6% decline compared with a quarter ago.

SRP data shows that UBS sold 3,795 products at US$6.6 billion in 2022, becoming the fifth largest issuer in the US on back of a 7.05% market share after J.P. Morgan, Citi, Goldman Sachs and Morgan Stanley. Compared with 2021, the sales volume decreased 22.7%. 

The slowdown in activity began in Q3 22 after UBS agreed to pay US$25m to settle investor fraud charges related to its UBS Yield Enhancement Strategy (YES) in June.

For its Q4 22 offerings, UBS used Morgan Stanley Wealth Management (34 products), Incapital (19), Goldman Sachs Private Banking (17), Raymond James (15) and J.P. Morgan Chase (five) as external distributors.

The Swiss bank’s top pick from an underlying perspective was the technology sector which appeared in 36 products worth US$93.7m, followed by retail, technology and travel & leisure. There were 85 products linked to non-equity names, including the SPDR S&P 500 ETF Trust, VanEck Vectors Gold Miners ETF and SPDR S&P Oil & Gas Exploration & Production ETF.

In Europe, SRP registered 11,145 structured products issued by UBS in Q4 22 across Switzerland (11,086), Germany/Austria (43), Norway (4), Sweden (1) and Italy (1).

By asset class, FX took the lead by being linked to 6,925 of the products featuring EUR/USD, GBP/USD and AUD/USD while shares and equity indices appeared in 3,994 and 155 products, respectively. There're additionally hybrid assets (34), ETF (23), credit (2) and interest rates (2), led by the UBS X-Asset Risk-Premia Portfolio 2.0 Index.

In Apac, UBS was the issuer of 1,911 structured products during Q4 22 across Taiwan (474) and Hong Kong SAR (1,437), including listed products. In South Korea, it's also the hedge provider of the Hanwha Smart ELS 9093, which was traded with Hanwha Securities in October 2022.   

Click here to view UBS AG’s Q4 22 earnings presentation.