The Swiss investment bank’s structured product activity in Asia Pacific market has dwindled over the past year.

UBS issuance and sales of structured products tumbled to 1,199 products valued at US$610m in the first quarter of 2021 from 1,836 products worth US$2.2 billion in the previous year.

SRP data shows that the range of asset classes in the bank’s Apac structured product issuance in Q1 20 and Q1 21 has shifted. In the first quarter of 2020, the majority of the products (708) was tied to single indices.

Other popular asset classes included ETFs (16 products) such as ChinaAMC CSI 300 Index ETF, and CSOP FTSE China A50 ETF, while a small number (eight) of the bank’s products were categorised under the real estate class, all of which were tied to the Link REIT underlying.

In Q1 21, UBS issued most of its structured products under single share (839) asset classes.

One product tied to SPDR Gold Shares was issued under the commodities category. The UBSPDRG@EC2110A, Call Warrant on SPDR Gold Shares had a strike date of 19 February 2021 and will reach maturity on 22 October 2021. The growth product’s payoff type is leverage long with stop loss.

US & Europe

In the US market, UBS boasted structured product sales of US$2 billion with 1,754 products during the first quarter of 2021, its best record since the same period a year prior where volumes stood at US$1.8 billion with 1,000 products.

The bank’s issuance saw a significant decrease during the middle of 2020 when sales reached US$1.5 billion (889 products) at the end of Q2 20.

This figure further dropped to US$1.4 billion (1,068 products) in the following quarter but managed to increase to US$1.6 billion (1,337) in the final quarter of the year.

UBS issued the highest number of products in Q1 21, compared to its second ranking of 1,000 products in Q1 20. In terms of sales, the bank is sixth on the SRP US league tables with Morgan Stanley (US$3.9 billion/835), Barclays (US$3.5 billion/662), Goldman Sachs (US$3.4 billion/899), J.P. Morgan (US$3.2 billion/1,204) and Citi (US$2.8 billion/883).

The bank has also maintained a strong presence in the European structured products market despite suffering a plummet in its issuance with a total of 18,696 products valued at €209.6m, compared with 32,684 products in Q1 20 worth €790m.

In terms of product issuance, UBS is one of the top 10 issuer groups in Europe this quarter, ranking ninth and owning 2.34% in market share, a decrease from 3.37% in the previous year.

By business line

During Q1 21, UBS’s profit before tax (PBT) was US$2.3 billion, representing an increase of 14% year-over-year, including net credit loss releases of US$28m.

The bank’s operating income for the quarter also increased by 10% year-over-year, while operating expenses increased by eight percent.

Net profit attributable to shareholders stands at US$1.8 billion, a 14% rise, with diluted earnings per share of US$0.49.

Global markets revenue decreased by 27% (US$554m), driven by a US$774m loss related to a default of a US-based client of the bank’s prime brokerage business.

Excluding this loss, global markets would have been up 11%, because of higher revenues from equity derivatives and cash equities products.

Within asset management, operating income increased by 24% YoY with 153% higher performance fees, while net management fees rose 14%. Performance fees increased, mainly in the bank’s hedge fund businesses, partly offset by its equities business.

Risk-weighted assets (RWAs) stand at US$287 billion, compared with US$289 billion in Q4 20 and US$286 billion in Q1 20.

Click here to view the bank’s Q1 21 earnings.