UBS is making a name for itself focused on core wealth management
UBS has no intention on becoming like Goldman Sachs
The Swiss firm is intent on its core wealth management franchise
Global markets businesses for UBS grew by 10% year-on-year
The Swiss bank is deliberately selective
UBS isn’t trying to be Goldman Sachs, it’s clear to see why the Swiss company is concentrating on its core wealth management business.
Ralph Hamers, CEO of UBS Group AG, said that the Swiss company’s subpar second-quarter performance compared to Wall STreet rivals was not due to a desire to be ‘an investment banker.’ It might make sense to approach investment banking with more discretion. However, investors must adjust their expectations appropriately.
The global markets operations at UBS had an increase in revenue of 10% year over year, which is flattering when compared to the prior year’s period, which also included some losses from the failure of Archegos Capital Management. Equities trade increased by 7% during this time, while rates, foreign currency, and credit all increased by 19%. In contrast, the similar business at Goldman Sachs Group Inc. increased by 32%. JPMorgan Chase & Co. and Bank of America Corp. produced mid-teens growth in market sales. Fixed income saw stellar performances from Goldman and Morgan Stanley, with revenue growth of almost 50%.
In a time when fees from structuring deals and funding for corporations have dried up, trading stocks, bonds, currencies, and commodities for institutional investors has proven to be a significant industry for all investment banking firms. Similar to some of its US peers, UBS saw a 57% year-over-year decline in advice and capital markets revenue.
The Swiss bank emphasised that the results shouldn’t have been too shocking because they were purposefully selective in investment banking, particularly in the US. The firm is principally a wealth manager, with additional businesses kept to support that core franchise.
