UBS reports decrease in EQD activity

Derivatives & solutions revenues dipped 29% to US$1.0 billion driven by a decrease in equity derivatives and FX revenues due to lower levels of client activity and volatility, partly offset by an increase in credit revenues.

As an issuer group, the Swiss bank has marketed over 30,000 products globally in Q1 23 with an estimated sales volume of US$9.6 billion which reflects a significant year on year decrease in issuance and a slight fall in sales (Q1 2022: 46,993 products /US$9.2 billion) but a growth from the previous quarter when UBS issued 25, 663 products worth an estimated US$5.1 billion.

More than half of the products were marketed in Switzerland (16,664 products), followed by Austria/Germany (10,773), Hong Kong SAR (1,236), the US (719), Taiwan (614), Italy (six), Finland (three), Sweden (two) and Norway (one).

The bank reported that its execution services revenues decreased 15% to US$422m, mainly driven by lower cash equities revenues, partly offset by higher revenues from foreign exchange (FX) products that are traded over electronic platforms.

Financing revenues on the other hand climbed by 21% to US$ 537m, mainly driven by higher revenues in prime brokerage, a recovery, and higher revenues in clearing and equities financing.

By asset class, global markets equities revenues decreased 23% to US$1.3 billion mainly driven by equity derivatives and cash equities, partly offset by financing. FX, rates and credit revenues grew one percent to US$658m, mainly driven by credit, partly offset by FX and rates.

Global banking revenues were down 30% to US$383m mainly driven by lower capital markets revenues.

As a result, the investment bank division posted US$2.3 billion total revenues, down 19% YoY, leading to pre-tax profit of US$477m, a 49% decline YoY.

'We intend to actively reduce the risk and resource consumption of Credit Suisse’s investment banking business,' stated UBS in the report, referring to the emergency acquisition of its long-time Swiss rival that's set to be completed in the second quarter of this year.

Several employees at Credit Suisse's global markets including senior traders and sales executives have been seeking job opportunities since the acquisition announcement as they expect a significant headcount reduction within the division, according to sources at the bank.

The positions at Credit Suisse's private banking segment are “much safer” as UBS plans to largely absorb the business as a complement of its wealth management activities.

Groupwide, UBS recorded RWA of US$321.7 billion as of the end of March, up 0.7% from three months ago. In the meantime, the investment bank arms of UBS and Credit Suisse posted respective RWA of US$97.6 billion and CHF39.6 billion (US$44.2 billion), according to their latest earnings report.  

As at 31 March, debt issued designated at fair value, which primarily consist of structured notes issued by UBS, was at a stable level at US$10.5 billion compared with a quarter ago. The figure was 17.3% lower compared with a year ago. 

Global wealth management revenues fell two percent to US$4.8 billion as higher net interest income was more than offset by lower recurring net fee and transaction-based income; while operating expenses decreased one percent to US$3.6 billion in Q1 23 YoY - as a result, pre-tax profit was down seven percent to US$1.2 billion.

Asset management reported a 13% decrease in revenues to US$502m in Q1 23 mainly driven by lower net management fees, leading to pre-tax profit of US$94m, which was down 46% YoY.

Personal and corporate banking revenues on the other hand grew by 18% to CHF1.2 billion, translating to pre-tax profit of CHF553m, which was 40% higher YoY.

Groupwide, the Swiss bank recorded total revenues of US$8.7 billion in Q1 23, down seven percent YoY, while its operating expenses rose nine percent to US$7.2 billion. Net profit plunged 52% to US$1.0 billion following a 'record quarter' seen in the prior-year period.    

Click here to view the Q1 2023 report of UBS AG.