July 31, 2012

UBS Wealth Results Up in Americas; Down Worldwide After Facebook Flop

Wealth Management-Americas posts a 28% jump in profits as net inflows to advisors remain stable

UBS (UBS) reported Tuesday that its net income fell to 425 million Swiss Francs, or 0.11 Swiss francs per share, in the second quarter from 1.02 billion Swiss francs, or 0.26 Swiss francs per share a year ago -- a decline of some 58%.

The firm’s investment bank had a pre-tax loss of 130 million Swiss francs (or $133 million) in the second quarter due to “challenging market conditions,” as well as a loss of 349 million Swiss francs (about $358 million) related to the Facebook (FB) initial public offering.

Its Wealth Management-Americas unit, though, had a pre-tax profit of $211 million in the quarter ended June 30 – a 28% jump over last year’s results of $165 million and a 1% gain from the earlier period, when pre-tax income was $209 million.

"Our strong capital, liquidity and funding positions, as well as our transparency and consistency in communicating these strengths, clearly speak in favor of UBS and reassure our clients in an otherwise adverse environment," said Group CEO Sergio Ermotti, in a press release. "Clients recognize this and continue to entrust us with their assets."

Americas’ Results

UBS’ operations in the Americas, led by Bob McCann (right), now include 7,021 financial advisors. That’s a jump of six FAs from the previous quarter and gain of 159 from the year-ago period.

Net new money in the second quarter was $3.8 billion, excluding dividends and interest, and $9 billion including them. This puts the inflows slightly below those of the first quarter but narrowly ahead of last year’s tally.

Per advisor, net new money was $541,000 in the quarter, excluding dividends and interest, and nearly $1.3 million per rep if these financial measures are included.

Total invested assets were $797 billion, down from $807 billion in the first quarter but up from $774 billion in the year-ago period. This Q2 drop, UBS says, was “primarily due to a decline in market performance.”

Invested assets per advisor were $114 million, and annualized revenue per advisor of $905,000 represented a jump of 1% from $897,000 in the first quarter and 3% from last year.

Total revenue for the unit was $1.59 billion – a 1% increase from the earlier period and a 5% improvement from the year-ago quarter.

Facebook Fiasco

UBS maintains that its corporate results were hurt by “the gross mishandling” of Facebook's market debut by NASDAQ. “As a market maker in one of the largest IPOs in US history, we received significant orders from clients, including clients of our wealth management businesses,” the company said.

UBS’ pre-market orders were not confirmed for several hours after the stock had commenced trading, and orders were entered multiple times before “the necessary confirmations from NASDAQ were received and our systems were able to process them.”

Though NASDAQ ultimately filled all of these orders, UBS says it was exposed “to far more shares than our clients had ordered.” As a result, UBS says it will “take appropriate legal action against NASDAQ to address its gross mishandling of the offering and its substantial failures to perform its duties.”

Reprints Discuss this story
This is where the comments go.