No Rating Impact on UBS from Q112 Results
Fitch Ratings says that UBS’s Q112 results show that the bank has made progress in implementing its more client-centric investment banking business model while maintaining its dominant global wealth management franchise. UBS’s Q112 results were broadly in line with Fitch’s expectations and have therefore no immediate impact on its ratings.
UBS’s adjusted pre-tax profit of CHF2.2bn for the quarter represents a significant improvement on Q411, but was down 10% on adjusted pre-tax profit in Q111. Like many of its peers, UBS benefited from improved market conditions compared with the very poor prevailing environment in Q411, notably in IB. It will take a longer period for the bank to convincingly demonstrate that its revamped IB business model will generate sustainable adequate returns.
The agency notes that the bank continued to strengthen capital ratios in the quarter. Stronger capitalisation together with a continued well-balanced earnings mix from the bank’s divisions could, over the medium term and all else being equal, be positive for the bank’s viability rating.