UBS reports tough fourth quarter, but profits up 79% in 2015

UBS suffer tough fourth quarter due to low levels of client activity and pronounced risk aversion.

UBS has reported a decrease of CHF 211 million in equities revenues in its fourth quarter results for 2015.

Equity revenues fell from CHF 944 million to CHF 733 million in 2015 due to lower cash and equity derivatives revenues in the fourth quarter of 2015 compared to the third quarter, according to the report.

Foreign exchange, rates and credit revenues also decreased in the fourth quarter from CHF 446 million to CHF 388 million, reflecting “higher client activity levels in the prior quarter as volatility increase increased following the actions of the People’s Bank of China in August 2015.”

Derivatives revenues were also down a massive CHF 152 million in the fourth quarter, “mainly driven by weaker trading revenues and lower client activity, primarily in Europe, Middle East and Africa and Asia Pacific.”

Collateral trading assets decreased by CHF 8 billion, mainly in the Investment Bank, “reflecting reduced need for externally sourced collateral and client-driven reductions in notional volumes, as well as fair value decreases.”

Trading portfolio assets were reduced by CHF 3 billion, but lending assets were broadly unchanged with a decrease of just CHF 4 billion. UBS said this was primarily reflecting reduced Lombard lending in Wealth Management.

In the report, UBS said: “The fourth quarter was characterised by very low levels of client activity and pronounced risk aversion.”

Sergio Ermotti, group chief executive officer added: “The fourth quarter is a good demonstration of our discipline. We were not tempted to take more risks or buy unprofitable net new money to offset seasonal effects and challenging market conditions.”

UBS’ full year business division report revealed asset management delivered adjusted profit before tax of CHF 610 million, up 20% year on year.

Its investment bank division reported profits before tax of CHF 2.3 billion and adjusted return on attributed equity of 31.3%, substantially above the target of greater than 15%. UBS said its resource utilisation continued to be efficient and disciplined.

For 2015 as a whole, UBS reported an increase of 79% net profit to CHF 6.2 billion, stating: “Despite very challenging market conditions, UBS’s business divisions delivered strong results in 2015, while prudently managing resources and risk.”