UBS Wealth Management Americas’ fourth quarter pre-tax profit plummeted 94 percent to $13 million, down from $217 million a year ago. The global wealth manager blamed the hit on market volatility, as well as increased legal and regulatory costs.
The unit’s underlying profit before tax was nearly $300 million when excluding $233 million in litigation costs, as well as added regulatory expenses and other similar matters, according to Gregg Rosenberg, spokesman for UBS.
“While markets have not been kind so far this year, as the world's leading wealth manager, we will not be distracted from our objective to deliver 10-15 percent annual adjusted pre-tax profit growth in these businesses over the cycle,” CEO Sergio Ermotti said on an earnings call Tuesday.
Overall, the Swiss bank reported its net profit for the quarter was up 11 percent from the prior year to 949 million Swiss francs ($931 million). However, UBS took advantage of a net tax benefit of 715 million Swiss francs ($701 million) during the fourth quarter, which compensated for the business units, including wealth, that showed declines for the quarter.
Ermotti said the fourth quarter the “most challenging” the bank has seen in several years. But there was a bright spot in the Wealth Management Americas unit. The business brought in $16.8 billion in net new money during the quarter, 6.8 percent annualized growth.
Here are the highlights for Wealth Management Americas business:
- Revenues for the fourth quarter hit $1.87 billion, down 3 percent from the $1.92 billion reported a year ago, due in large part to lower recurring net fee income and a decreased transaction-based income based on lower client activity.
- The $16.8 billion in net new money for the quarter came largely from significant inflows generated by newly recruited advisors, as well as $4.9 billion from advisors who have been with the firm over a year.
- Invested assets were up 4 percent from the third quarter to $1.03 trillion, and flat compared to the year prior.
- Managed account assets were up 3 percent to $351 billion, and represented 34 percent of total invested assets.
- The business recruited 151 experienced advisors during the fourth quarter, bringing total headcount to 7,140 at year-end.
- The attrition rate for advisors with productivity less than $250,000 decreased to near historic lows.
- Invested assets per advisor were $145 million, up 2 percent from the third quarter’s $142 million, and down slightly from the $147 million reported a year ago.
- But revenues per advisor dropped 5 percent to $1.061 million, from the $1.111 million generated during the third quarter.