Strength of UBS investment bank makes up for wealth management miss

Swiss banking group UBS today announced a jump in profits as its investment bank outperformed but wealth management lagged behind investor expectations.

Group net profits in the first quarter rose by 19 per cent year-on-year to SFr1.5bn (£1.1bn), with profit before tax up by 17 per cent.

Revenues at the group's enormous wealth management arm, which accounts for more than half its profits, rose by more than five per cent year-on-year to hit SFr4.2bn, but below analysts' consensus expectations thanks to lower net interest income.

Shares fell by more than three per cent on the Swiss stock exchange at the time of writing.

Read more: UBS buffeted by US tax changes but hikes dividend

However, the investment banking arm saw revenues rise by 10 per cent year-on-year to reach SFr2.3bn, boosting profits before tax by 13 per cent year-on-year thanks to a strong performance from its equity desk, amid market volatility in February and March – although the group reported that conditions for rates and credit flow products were "challenging".

The boost to the investment bank has been reflected already in competitors across the Atlantic, with a procession of US banks reporting record profits thanks to clients scrambling to adjust their stock market portfolios.

Read more: UBS delivers chunky UK GDP growth upgrade

In its results statement the bank said it was "confident" the strong prospects for the global economy will continue to sustain markets in spite of "geopolitical tensions and the rise of protectionism".

The bank's common equity tier one capital ratio, a measure of the size of the bank's financial buffers, came in at 13.1 per cent.

Sergio Ermotti, group chief executive, said: “We had an excellent start to 2018, with our results once again showing the power of our diversified business. Momentum in our business is good and we continue to invest for growth and efficiency.”

Read more: UBS chair: We're eyeing the exit ahead of Brexit

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