UBS has reported a 14% profit growth in Q1 2021, though the performance was marred by a $774m hit from exposure to collapsed US-based hedge fund Archegos Capital.
Archegos was a customer of the bank’s prime brokerage business.
The Swiss investment bank unveiled that it has exited all remaining exposures in April this year, with “related losses recognised in the second quarter of 2021 which are immaterial for the Group”.
The group’s attributable net profit stood at $1.82bn for the quarter to March 2021, versus $1.59bn a year ago.
Operating income grew 10% to $8.7bn from $7.93bn over the period.
Operating expenses increased 8% to $6.41bn from $5.93bn, driven by personnel expenses.
The common equity tier 1 capital ratio (CET1) was 14% at the end of March 2021 compared to 12.8% in the prior year.
Global Wealth Management
The unit’s pre-tax profit increased 16% year-on-year to $1.41bn.
Net interest income dipped 3%, hit by pressure from lower US dollar interest rates on deposits.
Invested assets rose 3% sequentially to $3.11bn, while fee-generating assets increased 4% sequentially to $1.33bn.
Inflows in all regions contributed to net new fee-generating assets of $36.2bn.
The division’s profit before tax slumped 42% to $412m. Global Markets revenue plunged 27%, due to the Archegos hit.
If stripping off the loss from Archegos exposure, Global Markets would grow 11%, due to higher revenues from equity derivatives as well as cash equities
The unit’s profit before tax was $227m, 45% higher than the prior year.
Operating income soared 24% and net management fees increased 14%. Hedge Fund Businesses led a surge in performance fees. .
UBS rival Credit Suisse too was hit by the Archegos saga, reporting a net loss in Q1 2021 after taking a $4.7bn Archegos hit.
Mike Dargan will join the group executive board in the role of chief digital and information officer (CDIO), replacing the former group chief operating officer (GCOO) function.
Dargan will assume the new role on 1 May 2021. CDIO will include the existing Group Technology teams, and Group Corporate Services. Business-aligned Operations will move into the respective business functions, while shared Operations will remain with CDIO.
Dargan has been working at UBS since 2016 and served as the head of Group Technology. Earlier, he had stints at Standard Chartered Bank, Merrill Lynch and Oliver Wyman.
Meanwhile, Markus Diethelm has decided to quit his role of group general counsel and will be replaced by Barbara Levi. The change will take place on 1 November 2021.
Diethelm will continue to serve in a senior adviser role into 2022, where he will manage select legacy litigation cases.
Levi most recently worked as the chief legal officer & external affairs at Rio Tinto Group. Earlier, she also held various senior positions at Novartis Group.