UBS publishes asset management performance targets
Swiss bank UBS has published key performance targets for its Global Asset Management business, as part of the strategic business repositioning announced alongside its latest quarterly results published this week.
According to the targets, the bank’s Global Asset Management business will seek:
– Net New Money growth rate: 3-5%
– Gross margin: 32-38 bps
– Cost / income ratio: 60-70%
The figures were published alongside other performance targets for the wealth management, retail & corporate and investment bank businesses, and the legacy portfolio of Basel III risk-weighted assets.
The targets came as group CEO Sergio Ermotti outlined the decision to hive off a significant proportion of the current investment banking businesses. This is intended to leave UBS with a focus on areas that have been seen as its more traditional sources of business strength. This is particularly the case for wealth management, which the bank reported attracted net new money of CHF12bn in its third quarter. The bank said it was the highest third quarter net new money inflows to its wealth management business in five years.
Results for the asset management business suggest alternative and quantitative solutions remain the key driver of profitability in this area, as performance fees more than doubled over the period, resulting in a 5% increase in pre-tax profit to CHF124m.
The new strategic focus is also meant to result in greater returns for shareholders, because the strategy is looking to generate more cashflow – which will support better payouts to shareholders in the form of dividends – as well as targeting more efficient use of capital on its balance sheet. Like all banks across Europe, UBS is subject to stricter capitalisation requirements in the wake of the financial crisis of recent years.