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UBS has released excellent Q1 results, both at an overall level and, more specifically, in its key operating divisions. The group’s WM franchise proved its superiority in Q1, reporting CHF 15bn in net new money and a significant uplift in its gross margin (up 5 bps to 91 bps). Furthermore, the Investment Bank’s repositioning strategy has been completely borne out by a very strong performance in client support activities, which will ultimately remain within the scope of the group. PLUS rating reiterated.
UBS’s results show that its key wealth management division faced a challenging short-term environment. The bank’s gross margin suffered a further quarter-on-quarter decline to 85 basis points. Nevertheless, the drivers are cyclical and have, in our opinion, bottomed out. However, our investment thesis is based on a structural repositioning of the group in the medium term. And on this issue, the group’s Q4 figures confirm that management is doing its job very well. PLUS rating reiterated.
Alongside its Q3 results, UBS has announced an ambitious plan to exit its controversial investment banking division by 2015. The group delivered surprisingly strong Q3 results in wealth management and in its investment bank’s equities franchise, which it intends to keep. In addition, the two thirds reduction in its investment banking arm will free up a large amount of capital that can be reinvested in more profitable core businesses. We confirm our PLUS rating on the basis of a credible restructuring story.
In Q2 UBS delivered exactly what it had promised the market: 1) downsize its Investment Banking arm, 2) generate equity and 3) focus on asset gathering. However, investors would clearly have preferred the impact on revenues to be at worst neutral; that was a pious hope. We regard this publication as perfectly respectable even if the trend of the gross margin on wealth management in Q2 is somewhat disappointing. By generating capital at this pace, UBS will soon be able to pay an attractive dividend.
The results posted by UBS, adjusted to exclude volatile accounting items, were 12% ahead of expectations. Costs were well under control in investment banking, the commercial dynamic and profitability of the wealth management activity progressed while solvency was once again greatly improved. In the current environment for banks in the Eurozone, the UBS business model, together with its potential for restructuring, are advantages which are not overpriced with the share trading at 0.78x 2012e book value. PLUS code confirmed.
The 2008 financial crisis was particularly painful for UBS. The bank was left with no option other than the complete restructuring of its Investment Banking activity. The group is therefore ahead of many of its rivals in the deleveraging process necessitated by the new regulatory framework (Basel III). But the group also benefits from a Wealth Management business which has returned to growth for several quarters now (positive net inflow). This activity with structurally high profitability (limited need for invested capital) is set to play a paramount role once again in the restructured group.
At first sight, Q4 results published by UBS seem to fall short of expectations at CHF 584 million against the forecast CHF 767 million; however, after eliminating exceptional items they are in line at CHF 863 million. Wealth management was the only black spot, undermined by reduced client activity in Q4 which had an impact on the gross margin. The other divisions reported more robust results and solvency has improved considerably. The valuation remains attractive given the higher quality of the business model. PLUS code confirmed.
The objectives announced yesterday in New York during the eagerly awaited Investor’s Day reached just the minim to satisfy investors’ expectations. But these were high given the prevailing regulatory, tax and financial environment. We regard these objectives as realistic and coherent. But most of all, they reinforce UBS’ status as a robust defensive bank, which is capable of increasing its dividend (to 10 centimes in 2011) at a time when the rest of the sector either cannot pay a dividend at all or is having to raise fresh capital. PLUS code maintained.
UBS published Q3 results riddled with one-off items which had, however, already been announced. In the end, news about the health of the key divisions, wealth management and commercial banking in Switzerland, proved reassuring. As to the investment banking arm, we are hoping that the Investors Day scheduled for 17 November will confirm its real downsizing. Shareholders’ equity progressed yet again and the share is now trading below its net tangible value per share on a 2012e base. PLUS code confirmed.
With the financial markets in their present turmoil it is hardly surprising that the group’s investment banking arm should be under pressure. However, the new business plan which is due to be revealed in detail in November will downsize this activity in favour of Wealth Management whose performance is improving strongly. In addition, with effect from 2012 the CHF 2 billion cost-cutting plan will offset revenues which we expect to remain flattish for the sector. PLUS code confirmed.
UBS showed in Q2 that it remains very dependent on the financial markets for its investment banking activity, of which the net income fell by 59% over the quarter. But the management’s excess of optimism concerning the growth of revenue will be offset by significant and welcome reductions in costs (CHF 1.5-2bn over 2-3 years). In parallel, wealth management has obviously stabilised, with an honourable gross margin of 0.97% and robust capital inflows of CHF 5.6bn. Reasonable valuation and PLUS reiterated.
UBS started 2011 with a net profit of CHF 1.8 billion, only slightly ahead of expectations although its key divisions published results of very good quality. The group’s net new money stood at CHF 22.3 billion, largely exceeding the consensus expectation of CHF 9 billion; the 98 bp gross margin in Wealth Management jumped by 6 bp sequentially, while trading revenues emerged above the trend of its US competitors. UBS is back in the race. PLUS code confirmed.
Even if it ended with a CHF 7.2 billion net profit, 2010 was simply a year of transition. Last year’s recruitment drive and restructuring are only now starting to become fully visible. The share is trading at a 20% discount to the sector average based on its 2011 earnings, on earnings estimates which are well short of the management’s own forecasts. PLUS code confirmed.
UBS ended 2010 with a net Q4 profit, excluding exceptional items, slightly below expectations at CHF 1.4 billion. But the investment banking activity proved more resilient than that of its competitors during a quarter which remained difficult. This bodes well for the recovery of activity in 2011. Wealth management should also benefit in terms both of margins and net capital inflows. Although confirmed, the operational recovery still has some way to go. PLUS code repeated.
We were not expecting any great surprises from this Investor’s Day and there were none. However, the medium-term objectives were confirmed and made credible by the management. Considering that the market is expecting UBS to report a pre-tax profit of CHF 10.7 billion in 2012, the management does not even need to fully achieve its CHF 15 billion target to create a pleasant surprise. PLUS code maintained for this share with a solid track record of restructuring.
UBS has not repeated the excellent performance achieved in the first half of the year. Q3 is lagging well behind underlying expectations. Customer activity was particularly low during the quarter and the strength of the CHF against all other currencies did not help either. This is a shame because it overshadows the big news item in this announcement: the first net inflow of cash since Q2 2008. We remain positive on the share in view of the optimistic short and medium-term prospects outlined by the management.
The solid CHF 4.2 billion net profit earned by UBS in the 1st half of the year reflects the bank’s return to health. The investment banking arm’s business dynamic has improved greatly, while the wealth management division’s profitability continues to rise. The share is trading at a 20% discount below the sector average based on its 2011 earnings, on estimates which are well short of the management’s own forecasts. PLUS code confirmed.
Despite a difficult environment for investment banks and fears surrounding wealth management activity, UBS published a net profit totalling CHF 2 billion in Q2, well above the forecast CHF 1.3 billion. The business dynamic of the investment bank has strengthened further, while the wealth management division’s profitability continues to improve. The share is trading at a 15% discount below the sector based on its 2011 profits and before any upward revisions which will make the discount look even bigger. Buy now.
UBS easily confirmed in Q1 2010 that the return to profitability in late 2009 was no mere accident. The CHF 2.8 billion pre-tax profit is positive in terms both of quantity and quality. The investment banking sector, which had been freewheeling until now, recovered faster than expected and is now out among the leaders again with revenues totalling CHF 3.9 billion in Q1. The other key division, wealth management, has not yet reported money coming in, but its profitability is improving despite a difficult environment. 2010 is looking good: PLUS code confirmed.
2009 ended on an upbeat note for UBS with a return to profitability in Q4. We expect 2010 to confirm this positive trend with a lasting return of confidence. There is still work to be done in order to regain the market shares lost since 2007 and the environment for Wealth Management remains difficult. But at 7.4x 2011 profits, UBS offers the benefit of great strength and high restructuring potential at an attractive price.
The return to profitability in Q4 is the first phase of the group’s reconstruction now that sound fundamentals have been restored. For UBS the issue of solvency has given way to that of growth — a big improvement. But several successive profitable quarters will be needed before a (net) capital inflow is resumed. The group is on the right track and January began very well on the investment banking side. The key posts in this division were filled in 2009 and revenues will follow in 2010.
As in Q2, the Group’s Q3 data must be read carefully to detect an improvement of the Group’s fundamentals. The UBS’ investment banking arm is on track for recovery. On the other hand, client confidence has not yet been restored. That will not be possible until the UBS moves back into the black in 2010. The management will have the difficult task of reassuring observers about the Group’s prospects when Investor Day comes round on 17 November. We think this is possible and confirm our PLUS code.
This summer has seen a reassuring news stream on UBS. The underlying operating result for Q2 was perfectly acceptable with encouraging signs for the future according to the management; the bank was able to avoid legal proceedings against the US fiscal administration. The Swiss Confederation then decided that UBS no longer needed government support and sold its shareholding interest. We believe that was the right decision and are lifting our recommendation from PLUS-R to PLUS.
UBS is still in the category of convalescent banking shares, but the treatments administered by Mr Grübel seem to be effecting a salutary cure. Cost-cutting and balance sheet risk reduction have been implemented aggressively and management now has elbow room to organize the redeployment of the bank’s strategic activities. The welcome Q2 operating result (the best of the last 8 announcements) is just the first step.
This second quarter was better than it seems at first sight because the net loss turned out reasonably close to expectations, despite the CHF 492 million charge for which the consensus had not allowed. UBS has proved its ability to generate a recurring profit equivalent to CHF 1 billion per quarter, once it emerges from the crisis. The management’s confidence might prove contagious with an end to capital withdrawals in the 2nd half, helped by a financial situation which is now very strong.
This announcement, of which we already knew the main points — with a CHF 2 billion loss — turned out in the end to be better than expected. Shareholders’ equity remains solid (Tier 1 = 11% pro forma), cash withdrawals have slowed distinctly compared to the previous quarter (CHF -15 billion against CHF -86 billion) and conservative provisions have been set up in the balance sheet. The new CEO has made this Q1 a quarter of transition, enabling him to lay the groundwork for a major restructuring of UBS, which is all to the good. PLUS-R code confirmed.
For 2009, and despite some persistent grey areas, UBS now seems to be relatively well positioned in the banking sector. Its wealth management activity, in the process of stabilising, should finally emerge from the losses incurred on the investment banking side and turn out to be more profitable than conventional business banking, in an environment of rapidly rising unemployment and corporate defaults. PLUS-R code confirmed.
Results for 2008 were terrible but they are behind us now. For 2009, and despite some persistent grey areas, UBS now seems to be relatively well positioned in the banking sector. Its wealth management activity, in the process of stabilising, should finally emerge from the losses incurred on the investment banking side and turn out to be more profitable than conventional commercial banking (loans to private customers and businesses) in an environment of rapidly rising unemployment and payment defaults. PLUS-R code confirmed.
This announcement brings few surprises; the net profit stood at CHF 296 million, in line with the figure hinted at when the SNB put its rescue plan in place. We had been expecting information about the capital requirements imposed by the SNB and the Swiss Banking Commission, but no details were forthcoming. In the end, the various measures taken will guarantee UBS recovery in 2009, but clients’ confidence will only be restored gradually. PLUS-R code maintained for the time being.
In a press release published this morning, UBS announced that it would be writing off up to CHF 60 billion of high risk assets in a transaction concluded with the SNB. This measure, accompanied by an injection of capital, wards off any risk of bankruptcy of the bank. But the bank’s clients must be convinced before we see a sustainable positive capital inflow again. In the meantime, we are keeping our “risky” code on this share, more because of disappointment over earnings than on account of any solvency risk.
At an extraordinary general meeting, UBS secured the election of four new members of its Board of Directors and made the advance announcement of a small profit in Q3. The Group also referred to the strategic repositioning of its investment banking arm which is clearly on the right track. These announcements give some reassurance as to the potential recovery of UBS just one month before the official publication of the next quarterly results.
UBS seems to be over the worst of the financial crisis after Q2, however massive outflows of capital signal a loss of confidence among clients. The strategic repositioning of UBS will take several quarters to convince clients and investors. The stock is trading in line with the market, limiting the probability of a pronounced rise in the stock in the very short term, however we remain convinced of its potential over a 12-18 month timescale and reiterate the PLUS-R code.
UBS seems to be over the worst of the financial crisis with this results publication, however the massive outflows of capital signal a loss of confidence among customers. The question now is to know if UBS’s repositioning has convinced its clients and investors of its ability to bounce back. The stock is currently trading in line with the market, limiting the probability of a re-rating in the very short term, however we remain convinced of its potential over a 12-18 month timescale and in the meantime reiterate the PLUS-R code.
Excluding its investment banking business and placing the Q108 results on an annualized basis, UBS is trading at 8 times its profits. Furthermore, the stock-market capitalisation represents approximately 3.5% of the managed assets (private banking and wealth USA). This seems cheap but this ratio takes account to some extent of the risks linked to investment banking. The evolution of this division remains the joker in the pack and places a considerable risk on the share. We maintain our long-term opinion, based on the group’s expected return to profitability, between the end of 2008 and 2009 (it will be difficult to avoid a loss for the year 2008). However, we believe that in the short-term the recent rise of the share price has already partly discounted these positive elements, and that investors’ sentiment will be influenced by the dilution of the profit per share resulting from the capital increases. PLUS-R code.
UBS has announced a loss linked to its investment banking activities. This did not come as a surprise. Management and commercial banking activities are generating robust profits in 2008 and will continue to do so. Measured against these activities, the price of the UBS share is very low. However, further writedowns linked to the disposal of US property assets are possible and might penalise the Q1 2008 results. This share carries a high risk despite its reasonable valuation. PLUS R.
UBS has announced a new profit warning on its annual result one week before the publication which is scheduled for 14 February 2008. The losses are slightly higher than forecast: 1) a net loss of CHF 12.5 billion in Q4 07; 2) a net loss of CHF 4.4 billion for the year 2007 as a whole. New writedowns are possible, in particular, and the issues surrounding the capital increase remain in abeyance until the general meeting which is scheduled for 27 February 2008. From the valuation angle, the share is trading with an attractive PE of 8.2 and a capitalization/assets under management ratio of 3.5%.
UBS has announced its results for Q3. They were seriously affected by writedowns linked to the subprime crisis in the USA. The figures are in line with the company’s forecast but all the same disappointing. Moreover, UBS has announced that it will probably need to state an additional provision in its accounts. The situation is expected to normalise in 2008, but caution remains the order of the day for the time being because of uncertainty surrounding the US property market.
All the divisions of UBS reported better than expected results. In addition, a new share buyback program worth around CHF 16 billion will be launched next March for a period of 3 years. The UBS business model remains excellent; this justifies a premium for the quality of its fundamentals and management. The buoyant financial markets and strong performance of the world economy should continue to favour investment banks in the first quarter. PLUS code confirmed.
Exceptionally, investors’ high expectations did not materialise. UBS was penalised primarily by the trading activity and the upward drift of investment banking costs. Low customer activity in July and August also had some adverse effect on the gross private banking margin. September and the beginning of the 4th quarter benefit from the strength of the equity markets. This share is trading at a premium on the sector; but this is justified by the excellent business model.
As usual, the results are excellent and better than expected. The valuation is less interesting with a PER’06e at 12.8x, i.e. a premium of approximately 6% against its competitors. But it is justified because of the quality of the fundamentals and management. The momentum remains favourable for investment and private banks. The strong trend begun in 2005 is likely to continue in Q1 2006. PLUS code maintained.
The results are slightly below consensus (-3%), but of good quality. While the investment banking activity is disappointing, performance on the private banking side remains excellent. The share buyback will continue in coming months. The market environment has improved and UBS will benefit. The sale of the shareholding in Motor Colombus might also by a positive catalyst with a capital gain of around CHGF 800 million before tax. With a PER’06e of 11.5x against a sector at 10.6x, the share still deserves a premium for the quality of its fundamentals. PLUS code confirmed.
Apart from the investment banking blip, results are generally good , especially in the private banking sector. The inflow of new money remains exceptional and the margins are high. UBS offers excellent revenue diversification and a strong private banking side. The share is trading at a PER’05 11x in line with competitors. The quality of its management and fundamentals would justify a premium. PLUS code maintained.
The quality of the results is good. With the exception of private banking (slightly disappointing), the different divisions performed extremely well. The CHF 5 billion share buyback programme should help to support the price. The 3% dividend yield is attractive. A quality premium for UBS against its sector is justified with a PER’05e of 11.7x against 11.2x. We maintain our PLUS code.
Results are in line with expectations. The performance of the private banking business activity remains excellent, in particular with a strong capacity to attract new funds. The quality of the bank’s fundamental deserves a premium (PER’05E of 11.1X at present in line with competitors). UBS remains one of our favourite shares in the European banking sector because it offers good revenue diversification and high management quality. PLUS code confirmed.
A faultless second quarter !Results are in line with expectations. The private banking franchise remains excellent, in particular with a strong capacity to attract new funds. With a PER’05E of 10.2X against a figure for the sector of 10X, the share is trading in line with the sector average, although its solid fundamentals would merit a premium. PLUS code confirmed.
Results published are excellent, in particular in the private banking sector – with a significant inflow of new money- and investment banking. UBS remains one of our favourite shares in Europe. We are raising the revenues by CHF 600 million (trading). With a PER 04e of 12.0x (other investment banks = 12.2x), the share deserves a premium for the quality of its fundamentals.
Results published for the 4th quarter are excellent. Provision remained low. The investment bank surprised us pleasantly and confirmed the upturn of activity in mergers and acquisitions and also on the equity side. With a PER 04E of 12.7X against a figure of 14X for its competitors, the share offers an attractive valuation. PLUS code maintained.
This story has received little media attention so far but that could change. The arguments put forward by the claimants are not particularly convincing. The Bergier report has not revealed any possible link between IG Chemie and IG Farben and it would be astonishing if new proof were to emerge. We maintain our PLUS code (PER 04e before goodwill 12.8x).
Results are excellent, despite the fact that expectations were high. The capital base remains strong (tier 1: 12%), so enabling the company to pursue its share buyback programme. With a per04'E of 15.7x against a figure of 11.9x for the sector as a whole, the share is trading at a premium justified by solid fundamentals combined with an excellent business model. We confirm our Plus code.
In 2002, the net profit of UBS registered a 29% fall despite the fact that the bank's credit risks are well under control. Writedowns for credit risks have even fallen because UBS has had no exposure to the big bankruptcies in the USA. We do not anticipate a significant improvement in the operating results in 2003. However, the recent share price fall is in our opinion unjustified and we are changing our code to Plus.
For the first nine months of 2002, the net profit of UBS fell by just 8.4%, proving that the bank has its credit risks well under control. Writedowns for credit risks have fallen sharply because UBS has no exposure to the big bankruptcies in the USA. We do not anticipate a significant improvement in the operating results in 2003 and are maintaining our Minus code in the light of the present share price.
The 1.1 billion (-24% Q/Q) net profit made by UBS in the fourth quarter exceeded market expectations. The bank avoided any significant exposure to Enron, Tyco and Argentina and seems to have kept credit risks well under control. However, the efficiency ratio remains high at 77.3% (against 70.4% in 2000). In our opinion, the share is highly priced and we are maintaining our «minus» code.
Net profit recorded by UBS for the third quarter was CHF 903 million, at the bottom end of the range of expectations. The bank achieved good results in terms of collection of funds and cost reduction. However, the efficiency ratio has deteriorated and stands at 83.6% which represents a high level. Because of the lack of visibility concerning the duration of the recession, we prefer to avoid exposure on an investment bank and are maintaining our « minus » rating.
The 33% fall in the net profit of UBS came as a pleasant surprise to the markets, which had anticipated a reduction in excess of 40%. The good news which shored up this share included an increase in managed funds in every division, a good quarter for the private banking business whose operating profit was down just 5% (Q2 01 versus Q2 00), resistance and market share gains of Warburg. Following the share price increase of 7%, we are sticking to our neutral code for the time being.
The fall in the net profit for 2001 was greater than anticipated by the analysts (-29% on 1st quarter 2000 against forecast –25%), with the net profit for the 1st quarter of 2001 at CHF 1.58 billion. Our opinion remains cautious with many good surprises (good performance of the commercial banking branch, higher operating income of the group, more new capital under management) but also reasons for concern for the rest of 2001 (very considerable and only partially justified increase in costs, substantial loss on risk capital). Our code remains unchanged at neutral.
Fourth quarter profits for UBS topped CHF 1.5 billion, up by 36% and exceeding expectations by 10%. In a difficult environment, UBS Warburg has adapted well in terms of costs. Paine Webber is the largest contributor of new capital (CHF 8 billion) and will run Private Banking onshore ex Switzerland. However, we remain sceptical regarding the UBS share on account of its wide exposure to the American market and the important weighting of the trading result (27% of income).
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