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The Swiss bank UBS said it lost $ 774 million in its first brokerage unit business related to the explosion of its Archegos Capital family office, otherwise profits were strong in the first quarter.
The success was less than that suffered by its members, which had a $ 5.5 billion charge on the bank’s closest rival, Credit Suisse.
On Tuesday, UBS posted a net profit of $ 1.8 billion in the first quarter, up 14% year-on-year, and more comfortable than expected by analysts despite the indentations caused by Archegos as the fast-growing market boosted customer activity.
The bank said its exposure to Archegos was completely dismantled, resulting in a $ 434 million reduction in quarterly net income.
Despite the loss, capital ratios in the bank have improved, UBS said. The ratio of working capital at the end of the quarter – a measure of the bank’s capital assets – was 14 per cent, the bank said, ahead of the 13 per cent target.
“We’re all disappointed and we’re taking it very seriously,” CEO Ralph Hamers said. “A detailed analysis of the relevant risk management processes is underway and appropriate measures are being put in place to prevent such situations in the future. This has never hindered our ability to serve our customers.”
Excluding investment banks, pre-tax profits fell 42%. Earnings rose in all other major UBS departments during the quarter. Assets invested on behalf of customers rose by more than $ 100,000 million in the first three months of 2021 to $ 4.2 million.
His wealth management business had a 16% pre-tax increase of $ 1.4 billion before taxes. UBS has revealed that it provided $ 219 billion in growth to wealthy clients (including family offices like Archegos) that led to higher profit lending that led customers to higher profits.
The asset management division had higher share income, with a 45 percent increase in earnings in the first quarter before tax reaching $ 227 million.
Yield rates rose 153 percent in the quarter as markets promised to revive government promises and economic cuts to curb the coronavirus pandemic to end sooner than expected.
UBS’s Swiss universal bank also performed well, with pre-tax profits rising 11 percent to $ 358 million.
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