UBS share price plummets after reporting weak first quarter
UBS has said it will cut an extra $300 million in costs this year after investment banking revenues fell in the first quarter.
UBS chief executive Sergio Ermotti said at a conference in London on Wednesday, that UBS conditions were among the toughest they’ve seen in years.
‘We are taking actions which will partly offset the impact of the difficult market environment so far this year, supporting capital generation,’ he said.
‘At this point I still believe we can achieve returns at least in line with last year's,’ Ermotti said.
UBS reported its return on common equity tier 1 capital stood at 13.1%, while its target for this year is 15%.
UBG shares plummet
The negative outlook has sent UBS shares down as much as 2.6%. It also prompted declines at investment banking rivals, Credit Suisse and Deutsche Bank AG.
Over the last ten years, UBS has cut thousands of investing banking jobs as it moved toward private banking, setting a precedent for copycat companies.
Ermotti said at UBS's investment banking division, revenues were down by about a third compared to the strong first quarter of 2018.
'We've seen some improvement lately but it remains patchy, and not enough to offset the challenging start to the year,' Ermotti said.
The bank’s global wealth management business saw revenue down about 9% from a year ago, Ermotti said. The bank aims to offset the drop-in revenue with a 5% reduction in costs, he said.
The bank's flagship wealth management business looked set to return to targeted inflows after $7.9 billion in net new money outflows over the final three months of 2018.
Ermotti said, a negative view amongst Asian customers, coupled with inactive US clients is what kept transaction-based income under pressure.
Wealth management revenues have slid roughly 9% this quarter.
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