Swiss banking giant UBS said Tuesday it took in USD 28 billion of net new money for its wealth management business in the first quarter, with USD 7 billion of that coming in the days after the announcement of its government-backed takeover of ailing rival Credit Suisse.
The Zurich-based bank, which is set to become Switzerland's banking titan after the merger closes in coming months, said underlying pre-tax profit dropped 22 per cent to USD 2.35 billion in the quarter compared to a year ago, while underlying revenues fell 8 per cent.
UBS said it had bought back USD 1.3 billion worth of its shares during the quarter, and reiterated that the share-buyback programme has been temporarily suspended ahead of the closing of the 3 billion Swiss franc (USD 3.4 billion) takeover of Credit Suisse announced on March 19.
In the first quarter, we maintained positive momentum across the firm and attracted USD 28 billion of net new money in GWM (Global Wealth Management), of which USD 7 billion came in the last 10 days of March, after the announcement of our acquisition of Credit Suisse, UBS said in a statement.
The bank said it captured demand for higher yield into money market and US-government securities at a time of rising interest rates that can increase the return on lower-risk assets like US government bonds.
We delivered these results during a quarter characterised by persistent concerns about interest rates and economic growth exacerbated by questions about the stability of the banking system, especially in the US, UBS said. Against this backdrop, private and institutional investors' activity remained muted.
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The net inflows at UBS came in marked contrast to the 61 billion Swiss francs (nearly USD 69 billion) in outflows that Credit Suisse reported Monday for the first three months of the year, adding that clients are still withdrawing assets.
The forced marriage of Switzerland's two biggest banks arranged by the Swiss executive branch, central bank and financial markets regulator was designed in part to help stabilise the global financial system that had been roiled by the collapse of two US banks.
The reputation of 167-year-old Credit Suisse had been pummelled in recent years over stock price declines, a string of scandals and the flight of customers worried about the bank's future.
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