UBS’s wealth business attracted $28bn of new money in the first quarter, as the Swiss bank benefited from the deepening crisis at Credit Suisse that led to its takeover of the stricken rival.
In first-quarter results released on Tuesday, UBS said $7bn had flowed into its wealth arm after it agreed to rescue Credit Suisse in a deal pulled together by Swiss authorities last month.
UBS’s asset management arm also sucked in $14bn during the quarter, while net new fee-generating assets grew by $8bn in its Swiss business. The snapshot from UBS comes a day after Credit Suisse revealed it suffered $69bn of outflows during the quarter.
“Our solid underlying performance and strong inflows this quarter demonstrate that we continue to be a source of stability for our clients during periods of significant uncertainty,” said UBS chief executive Sergio Ermotti, who returned last month to steer the integration of its rival.
While the inflows point to the benefits of its $3.25bn takeover of Credit Suisse, the deal also brings significant challenges. Since it was announced, UBS shares have risen 6 per cent, though analysts are wary of the costs and time it will take to integrate Credit Suisse.
The bank said on Tuesday it expected to complete the acquisition next month and would provide more details about the integration and its plans to wind down much of its rival’s investment bank over the rest of the year.
“With this transaction, we expect to reinforce our position as a leading and truly global wealth manager with strategic scale and complementary capabilities in the most attractive growth markets,” added Ermotti.
UBS said it had spent $70mn on advisory fees related to the deal.
Its acquisition of Credit Suisse dominated UBS’s first quarter, when it made $1bn of net profit, down 52 per cent from the same period a year ago and below analysts’ estimates. The results were hit after UBS increased its provisions by $665mn for litigation related to mortgage-backed securities.
Ermotti said the bank was in advanced discussions with the US Department of Justice over the matter, which dates back 15 years.
Keefe, Bruyette & Woods analyst Thomas Hallett described the results as “lacklustre”, adding: “Overall, the bar was set low into earnings and yet results still managed to disappoint.”
The bank repurchased $1.3bn of shares in the quarter, though the buyback programme was temporarily suspended after the announcement of the Credit Suisse deal.
UBS said geopolitical tensions between China and the US, along with the Russia-Ukraine war, had caused uncertainty in asset valuations and the economic outlook, prompting many clients to diversify their cash holdings by investing in money market funds.