Wealth management nets UBS over SFr19bn

Wealth management was the key driver in second quarter results for Swiss banking and investment giant UBS, contributing a near record SFr19.2bn to UBS’s SFr30bn (?19.3bn) in net new money.

According to Goldman Sachs analyst Richard Ramsden, “the private bank continues to be the key value driver in the group”. Pre-tax profit for wealth management was SFr963m, up 5 per cent from the first quarter of 2005.

European wealth management saw net new money inflow of SFr6.9bn, with the biggest contributions coming from the UK and Germany. Invested assets grew to SFr101bn from SFr90bn at the end of March.

Reporting on the results, Mr Ramsden said UBS was “reaping the rewards” of the expanded distribution network for its wealth management arm.

The new Spanish business produced inflows described as “significant”, on the back of the launch of the Absolute Asset Allocation products. These aim to meet client targets rather than industry benchmarks, and are tailored to the traditionally more cautious Spanish investors.

According to UBS, the idea is to calculate how individual investment decisions affect risk levels, and so reassure clients without losing the advantages of portfolio diversification.

Mr Ramsden attributed 12 per cent year-on-year growth in revenues for the private bank to a 19 per cent boost in assets and private client advisers.

The firm increased its client advisers by seven to 819 over the quarter, which increased costs but should lead to in-built operating leverage in the long-term.

Analysts were optimistic regarding the future for the wealth management arm, with Mr Ramsden and Kian Abouhossein, of JPMorgan, both predicting continued growth for the remainder of the year.

Mr Ramsden estimated that net asset inflows alone would boost incremental revenue by SFr600m, 8 per cent up on 2004, while Mr Abouhossein anticipated net new money growth of between 5 and 6 per cent a year, ex-acquisitions.

He added that this looked “clearly conservative” considering the increasing margins from a better mix of clients and given that the European on-shore business was “to turn positive by 2006”.