UBS Q1 2021 results

LONDON – UBS on Tuesday reported net profit of $ 1.8 billion for the first quarter of 2021, revealing a heavy blow to profits from the scandal involving Archegos Capital.

The Swiss bank said income was $ 774 million lower due to the default of hedge fund Archegos, which collapsed last month after taking too many risks. The US-based family office was a client of UBS’s prime brokerage business.

UBS said on Tuesday it had given up all exposure to Archegos and any second-quarter loss would be “irrelevant” to the bank.

A number of banks have been hit by the scandal, including Credit Suisse, which last week reported a net loss for the quarter due to 4.4 billion Swiss francs ($ 4.8 billion) affected by the collapse of the same American hedge fund.

“Our first quarter results also took into account a loss related to the default of a single US-based prime brokerage client. We are all clearly disappointed and take this very seriously,” said Ralph Hamers, CEO of UBS in a statement, adding that a detailed review of risk management was underway.

UBS’s net profit for the first quarter increased by 14% compared to the previous year. Analysts expected that figure to reach $ 1.6 billion over the period, according to Refinitiv.

Going forward, UBS said second quarter revenue will be affected by “seasonal factors,” such as lower client activity compared to the first three months of the year. The Swiss bank expects a positive effect from rising asset prices, but has warned that there is “lingering uncertainty” about the economic recovery, which could impact its next earnings.

Other highlights of the quarter:

• Operating profit reached $ 8.7 billion from $ 7.9 billion a year ago.
• Operating expenses were $ 6.4 billion, up from $ 5.9 billion a year ago.
• The CET 1 ratio, a measure of banks’ solvency, reached 14% against 12.8% a year ago.