UBS’ wealth management business picks up

Swiss banking giant UBS has seen its wealth management business pick up, as its first quarter results for this year show high net worth clients have returned after the Group previously lost activity through bail-out and a regulatory scandal.

Inflows of 11.1bn CHF were poured into its wealth management business over the past three months, the highest levels since the end of 2007, the results showed.

Wealth management activity made up over half of net new money for the Group as a whole, which was 20bn CHF.

High net worth and ultra high net worth business was drawn in from all regions apart from Europe, where clients were lost, said John Cryan, the Group’s Chief Financial Officer in a webcast.

The overall improvement in wealth management derived partly from reduced costs as well as greater client activity. In the previous quarter, the Group was hit by a 40mn CHF charge payable to the Swiss government after it emerged the bank had helped its US clients evade tax.

As a result of clearing the payment, litigation costs were down by 4%, or 163mn CHF in the first quarter of 2011 against what they were in the last quarter of 2010.

UBS’ asset management business gained 5.6bn CHF of net new money, the highest since the fourth quarter of 2006, with most of those inflows into equities, in a sign of improved investor confidence.

But income and pre-tax profit for the asset management arm were both still lower than they were in the first quarter of last year. In Q1 2010, operating income was 521mn CHF, whereas in Q1 2011 it was 496mn. While pre-tax profit was 137mn CHF in the first quarter of 2010, in the same quarter this year it was 124mn CHF, or 13mn CHF lower.

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