ZURICH (Reuters) – UBS (Reuters)UBSG.S.) said it targets ultra-wealthy Americans as it reported a strong investment banking performance that offset the sluggishness in its wealth management business.
FILE PHOTO: The logo of the Swiss bank UBS can be seen in a branch in Basel, Switzerland, March 29, 2017. REUTERS / Arnd Wiegmann / File Photo
The largest bank in Switzerland, which manages the money of half of the billionaires in the world, said on Thursday that it intends to bring in 70 billion Swiss francs ($ 70 billion) of new inflows from the United States over the next three years.
With more billionaires from the US than anywhere else in the world, Swiss money managers have begun to woo wealthy Americans who may wish to invest part of their money abroad.
UBS's new goals are geopolitically tense and tensions in trading have weighed on the home business as the company's asset management has fewer customers.
But UBS surprisingly increased net income by 32 percent in the third quarter, after pre-tax profit in Investment Banking increased 75 percent, and strong business in America offset modest growth in Wealth Management and flat earnings in the home market and Europe, Middle East and Europe Africa.
America has prosperity
In the face of a highly competitive and largely saturated Swiss asset management market and weak growth prospects in Europe, UBS was planning to expand into the US.
It targets pre-tax profit growth, which is at the upper end of the unit's 10-15% target over the period 2019-2021, while injecting fresh money at an annual rate of 2-4%.
"The expansion in the Ultra-High-Net-Worth US segment is expected to generate significant net new money inflows over the next three years," UBS said in a statement.
In the US, the profit margin before taxes should even be increased to 25 percent by 2021. This represents an increase of 900 basis points over the 16 percent in the third quarter.
Martin Blessing and Tom Naratil, along with asset managers, will provide details about the plans at 1300 GMT.
INVESTMENT BANK SHINES
Although UBS once again exceeded the expectations of its investment bank, analysts and investors were wary of accepting profits in a deal that was considered more volatile and outside Zurich Bank's core business.
Over the last ten years, the bank has scaled back its capital-intensive investment bank to focus more on the world's wealthy. It says that the business is essential to fully support wealth management clients, focusing on profitable advisory and execution niches that consume less of the balance sheet.
UBS made few changes to its investment bank after former head Andrea Orcel headed Santander, Spain's largest bank (SAN.MC) in September. It is now headed by co-bosses Piero Novelli and Robert Karofsk, who will provide more details shortly after 1500 GMT.
UBS's shares rose 1.9% at 0927 GMT, compared to a 1.4% increase across the European banking sector.
(1 $ = 0.9975 Swiss Francs)
Reporting by Brenna Hughes Neghaiwi; Editing by Michael Shields and Alexander Smith