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Swiss bank UBP revenue falls despite asset jump
January 30, 2013 / 5:21 PM / 5 years ago

Swiss bank UBP revenue falls despite asset jump

* FY revenue falls to 691 mln francs vs 763 million

* Assets top 80 bln Sfr for first time in 3-1/2 years

* Bank still in the market for acquisitions

* Net new money strong in Asia, Middle East

By Martin de Sa‘Pinto

ZURICH, Jan 30 (Reuters) - Revenue at Swiss private bank Union Bancaire Privee (UBP) fell 9 percent in 2012 despite an 8 billion franc rise in assets under management, illustrating how client inactivity is crimping income at private banks.

Revenue fell to 691 million francs ($749 million) from 763 million a year earlier, due to a sharp fall off in trading income. Net profit was almost stable at 175 million francs as the bank kept keeping a tight rein on costs, UBP said in a statement on Wednesday.

Since the onset of the financial crisis in 2008, low interest rates have crimped Swiss banks’ profits on deposits, while revenue from client trading has dried up. Private banks like UBP also suffer from the soaring franc, which hits margins because costs, mainly in the domestic currency, have soared in relation to revenue largely in dollars or euros.

Larger rival Julius Baer saw its gross margin slip below 100 basis points for the first time in several years in the first half of 2012, while competitor EFG closed offices and sold off its financial products unit last year in an effort to shore up its margins and financial strength.

UBP’s fall in revenue came in spite of a 12 percent jump in assets under management, which topped 80 billion francs for the first time since 2009, boosted by 4 billion in net new money and 2 billion from acquisitions.

CONSOLIDATION PROCESS

UBP is splashing out to expand in a bid to offset falling revenue and weaker profits after assets almost halved from their 2007 peak of 135 billion francs, and is open to making further buys.

“The landscape in Swiss private banking will continue to change due to pressure on margins, reduced revenues and increased costs,” said Chief Executive Guy de Picciotto in a telephone interview. “We see ourselves as a player in the consolidation process.”

Swiss banks have also been hit by a series of tax rows with countries including the United States and Germany, which have prompted some western European and American clients to withdraw assets held in Swiss banks. New clients from emerging markets have taken up some slack, though profitability in these markets is far lower.

The bank said it had expanded its client base especially in Asia and the Middle East, adding that South America, in particular Brazil and Mexico, would also be growth areas.

While de Picciotto was also bullish on longer-term growth prospects in Europe, he said European perceptions of Switzerland would need to “stabilise” first.

“I‘m not sure this will happen in 2013, though the process might begin with the new ‘Weissgeld’ strategy from the Swiss government,” he said, referring to proposals to ensure banks only take in tax-compliant money.

“In the long run people will continue to trust Switzerland, not for secrecy but for stability and competence.” ($1 = 0.9221 Swiss francs) (Editing by David Holmes)

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