UBS is one of the few banks in Europe trading at book value and earning its keep. The path of least resistance for boss Ralph Hamers is to change little and talk a lot about ESG, writes LiamWardProud
, it looks bloated. Operating costs will eat up about three-quarters of revenue next year, based on Refinitiv median estimates, compared with two-thirds on average for the Americans. Both peers fetch chunky premiums to book value, implying considerable upside if Hamers can slash costs and mimic their higher returns.
That may be impossible. Part of the gap is down to the larger domestic U.S. market, which also has better lending margins. And UBS’s high wealth-management costs have been an investor bugbear for years. Shrinking them meaningfully might require quitting some countries, which is unlikely for a group that sees itself as the preeminent global private bank. A fundamental overhaul of the bank’s IT systems, which might deliver long-term savings, would come at the expense of near-term earnings.
- In UBS’s biggest business, global wealth management, revenue increased by 21% to $4.8 billion, driven by a 30% surge in recurring income such as management fees charge on the value of clients’ assets. - That was mainly a function of rising stock markets. The same trend helped UBS’s asset management business increase revenue by 27% to $666 million.Editing by Rob Cox and Karen KwokReuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day.
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