UBS Group (UBS) CEO Warns Investors Of Lower Revenues In Q1
Zacks Investment Research | Mar 22, 2019 08:43AM ET
UBS Group AG’s (NYSE:UBS) CEO, Sergio Ermotti seems to have warned investors about first-quarter 2019 results much before the actual release. At a conference in London, Ermotti informed that the company is witnessing its worst quarter in years.
He stated, “Volatility and volumes are muted with limited activity from institutional and global wealth management clients.” Thus, the bank’s wealth management and investment banking division’s revenues have been experiencing a decline so far this year.
Investment banking revenues in the first quarter of 2019 are down nearly one-third compared with the prior-year quarter.
Ermotti added, “We've seen some improvement lately but it remains patchy, and not enough to offset the challenging start to the year."
Hence, the outlook for the investment banking division was lowered. Now, first-quarter pre-tax return on attributed equity for the investment banking division is expected to be in the mid-single-digit range, down from 15% targeted earlier for the 2019-2021 period.
In order to offset the impact of the current market scenario to some extent, the bank has stated that it is making an effort to save an additional $300 million in 2019 by slowing down the hiring of employees and holding back some of its IT projects. Results of these efforts are expected to be seen mostly in the second half of the year.
Maintaining cost discipline is significant for the long-term success of UBS Group. The company has been trying to improve cost efficiency, and strengthen cost management and transparency. We believe that gradual cost reductions will aid its bottom-line growth to quite an extent.
Shares of UBS Group have lost 29% over the past 12 months compared with 9.3% decline of the Zacks Investment Research
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