UBS has beat expectations for the primary quarter of 2022 and mentioned it has additional diminished its publicity to Russia.
The Swiss financial institution on Tuesday reported internet revenue attributable to shareholders of $2.136 billion, above forecasts compiled by the financial institution of $1.79 billion.
It marks a 17% rise from the $1.82 reported for a similar interval of 2021 and follows a drop in quarterly internet revenue to $1.35 billion on the finish of the yr.
The financial institution has beforehand described its market danger publicity to Russia as “restricted” and on Tuesday mentioned it had diminished its publicity to $0.4 billion as of March 31, in contrast with $0.6 billion on the finish of 2021.
As well as, it mentioned it had no materials publicity to Ukraine or Belarus, and that it isn’t conducting any new enterprise in Russia or with Russia-based purchasers.
“Macroeconomic, geopolitical and market elements created a excessive degree of uncertainty within the first quarter, with Russia’s invasion of Ukraine, COVID-related restrictions and lockdowns, greater volatility, the decrease financial development outlook, and issues about greater inflation and the financial coverage response,” the financial institution mentioned in a launch Tuesday.
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Talking to CNBC’s Geoff Cutmore Tuesday, UBS CEO Ralph Hamers mentioned: “It’s fairly unpredictable on the market.”
Listed here are another key metrics for the quarter:
- Working earnings got here in at $9.36 billion, versus $8.71 billion a yr in the past.
- Return on tangible fairness, a measure of profitability, stood at 16%, up from 14% a yr in the past.
- CET 1 ratio, a measure of financial institution solvency, was 14.3%, versus 15% on the finish of 2021.
The corporate’s inventory traded nearly 2% greater shortly after markets opened in Europe.
A key uncertainty on the horizon is how central banks will react to greater inflation — and this could have direct penalties on banks’ efficiency.
“The ECB will intently take a look at what the [U.S. Federal Reserve] is doing and the Fed is forward of the ECB. But additionally, [it’s] a bit late, let’s be sincere. So the ECB is a little bit bit late as effectively, as a result of they do not need to … be sooner than the Fed,” Hamers advised CNBC.
The European Central Bank has mentioned it is going to finish its asset purchases program in June, however has not but given a exact timeline for when it’d improve rates of interest.
“We do count on that there shall be a primary hike in charges in direction of the tip of the yr on the ECB facet,” Hamers mentioned.
One other challenge dealing with the European financial system is whether or not the battle in Ukraine will drag it into recession. European leaders have imposed robust sanctions on Russia and are contemplating additional measures to punish the Kremlin, together with a potential ban on oil imports.
When requested if oil and pure gasoline sanctions on Russia might pose a danger for Europe, Hamers mentioned: “Of Russian oil not a lot, of Russian gasoline that is a unique — a a lot greater problem and that is often because massive half[s] of industries are depending on gasoline as their base commodity to make their product … so that is what might trigger the second order impact particularly within the European financial system.”