UBS Q1 profit slides amid low transaction volumes

Net profit declined to CHF707m from CHF1.98bn in the first quarter of last year, with diluted earnings per share of CHF0.18 compared to CHF0.25.

Pre-tax profit in the wealth management division slid to CHF557m from CHF951m in 2015. UBS said it saw the lowest transaction volumes recorded for a first quarter.

Meanwhile, revenue was down 23% to CHF6.8bn and the bank’s adjusted return on tangible equity slipped to 8.5% from 14.4%.

The bank said negative market performance, substantial volatility, and underlying macroeconomic and geopolitical uncertainty led to more pronounced client risk aversion and abnormally low transaction volumes in the first quarter.

UBS said some of these factors have stabilised recently, but the underlying macroeconomic challenges and geopolitical risks highlighted previously continue to contribute to client risk aversion and are unlikely to be resolved in the foreseeable future.

In addition, it said low interest rates, and the relative strength of the Swiss franc, particularly against the euro, continue to present headwinds.

On the upside, UBS said its combined wealth management businesses attracted strong net new money totalling CHF29bn, the highest since 2008.

Chief executive officer Sergio P Ermotti said: “The resilient results we delivered in challenging market conditions reflect our discipline and focus, as well as our diversified business model. In view of exceptionally low client activity levels, we continued to manage our resources effectively while making progress on costs."

At 0928 BST, UBS shares were down 5.9% to CHF15.56.