UBS Posts Strong Gains and Says Hunger for Brokerage Firms Unfulfilled

In reporting record first-quarter profits yesterday, UBS expressed interest in following up its recent acquisition of Piper Jaffray’s brokerage unit with more purchases

In reporting record first-quarter profits yesterday, UBS expressed interest in following up its recent acquisition of Piper Jaffray’s brokerage unit with more purchases.

The firm’s total net income rose 33 percent, to $2.8 billion from $2.2 billion in the year-ago quarter. Pretax profits for UBS’ U.S. Wealth Management unit also increased 33 percent, to $152 million from $114 million at the same time last year. Client assets in the group increased 22 percent, to $699 billion from $574 billion the same time last year, while the number of financial advisors decreased to 7,374 from 7,503 (not including Piper Jaffray reps).

With the ink still drying on its deal to buy Piper Jaffray’s brokerage unit, the bank reiterated its interest in more acquisitions that make strategic and financial sense. Just last quarter, Group CEO Peter Wuffli said that the firm is “looking into the U.S. on the ultra-high-net-worth segment” and that they “are very confident about further growth opportunities.”

According to a March report from Citigroup analyst Jeremy Sigee, the firm has been actively searching for a U.S. trust capability and has found several suitable candidates (Schwab-owned U.S. Trust and Northern Trust have been rumored possibilities) but no management team that has been willing to sell the business at a reasonable price.

In the meantime, the firm recently hired Stewart Brenner, a Merrill private banker with multifamily office experience, to be COO of the firm’s ultra-high-net-worth private wealth-management group, run by Michael Schweitzer and Anthony DeChellis.

UBS said corporate results benefited from "strong performance fees earned in alternative and quantitative investments as well as in traditional asset classes combined with higher asset-based fees reflecting both net new money inflows and rising financial markets."

The performance anchor for UBS, which claims to be the world’s largest asset manager, was its investment-banking unit, led by a surge in revenue from equities, which increased pretax profit 34 percent, to $1.43 billion from $1.06 billion. “Clearly our investment-banking area benefits from a more vibrant and active capital market, a good benign situation and a good macroeconomic situation,” says CFO Clive Standish.

The international and Swiss wealth-management unit also had big gains; its pretax profit leapt 39 percent, to $1.04 billion from $747 million. The firm’s global asset-management business’ pretax profit jumped 67 percent to $305 million.

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