UBS generated net profit attributable to shareholders of $3 billion in the first quarter, up 80% year-over-year and beating the $2.8 billion estimated by analysts, according to a consensus survey compiled by LSEG.
Swiss banking and asset management’s common equity tier (CET) 1 capital ratio – a gauge of bank solvency – also increased, reaching 14.7% during the period, from 14.4% in the previous quarter.
Reporting its first-quarter earnings on Wednesday, UBS said it was on track to buy back $3 billion in shares ahead of its next second-quarter earnings report, having repurchased $900 million in shares over a three-month period.. The bank also signaled plans to buy more shares by the end of the year.
Shares in UBS rose more than 5% in early trading.
The Zurich-headquartered firm said markets remained “strong” amid hopes for a lasting solution to the ongoing Middle East conflict.
But acknowledging that risks remain “elevated” amid a rapidly changing environment, the bank warned that second-quarter interest income across its global wealth management and personal and corporate banking businesses would be “flat”.
CEO Sergio Ermotti said UBS had enjoyed a “very strong quarter,” showing resilience despite tensions arising from the US-Iran war, adding that “markets say a solution will be found.”
Speaking on CNBC’s “Squawk Box Europe” on Wednesday, Ermotti highlighted strong performance in the equity capital markets business, as well as growth in its alternative assets unit, noting that UBS has seen “good momentum across the country.”
“We’ve seen all of our businesses make double-digit profits,” Ermotti told CNBC’s Carolin Roth in an interview.
Net profit before tax was $3.9 billion for the quarter, up 54% year-over-year and beating analyst expectations of $3.2 billion.
UBS.
The group’s global wealth management business boasted $37 billion in new assets at the end of the quarter, an annual increase of 3.1%. Total new capital within the asset management segment increased by $14 billion, up 2.7% year over year.
The Swiss government recently introduced plans aimed at preventing the collapse of a bank in the form of Credit Suisse, which will require UBS to hold about 20 billion in additional capital.
UBS has continued to push back against a proposed overhaul of the rules, which will see investments held by its foreign subsidiaries treated separately from its group-wide CET1 capital.
Meanwhile, Ermotti said the bank “doesn’t see any major disruptions or problems” in the private debt space. He added that UBS’s exposure here is “very diversified” and “good quality”, amounting to about 0.5% of its balance sheet.
“A number of funds are under pressure, while others were monitoring according to the terms and conditions of the car,” he said. “But other than that, we don’t see a lot of tension. It’s more of a liquidity issue, rather than a clear fundamental performance issue.”
