UBS has reported an increase in pre-tax operating profit, while its Americas business was hit by higher charges for provisions for litigation, regulatory and similar matters.

UBS’s wealth management business delivered a pre-tax operating profit of SFr2.689 billion (around $2.64 billion) in 2015, from SFr2.326 a year earlier. Its Americas wealth business reported a pre-tax operating profit of $754 million, down from $981 million a year earlier.

Wealth management operating income, on a reported basis, was SFr8.155 billion in 2015; America wealth management income was $7.831 billion for the year, Switzerland’s largest bank said today.

On a quarterly basis, pre-tax profit was SFr344 million in the fourth quarter of 2015, down SFr295 million compared with the prior quarter, UBS said. Adjusted profit before tax decreased by SFr193 million to SFr505 million, mainly reflecting SFr148 million higher adjusted operating expenses. This was partly because the fourth quarter included SFr78 million higher net charges for provisions for litigation, regulatory and similar matters.

In the Americas business for Q4, pre-tax profit was $13 million compared with $268 million in the third quarter, mainly reflecting $180 million higher net charges for provisions for litigation, regulatory and similar matters. Net new money inflows were $16.8 billion and mainly reflected significant inflows from recruited financial advisors.  

Ratios

Within the wealth segment, its cost/income ratio – a closely-watched measure of margins for this sort of business – was 67 per cent at the end of the year, down from 70.5 per cent at the end of the previous year. With the Americas business, the ratio rose, however, to 90.1 per cent from 87.3 per cent a year earlier.

Client assets stood at SFr1.122 trillion at the end of December 2015 at the wealth management division, from SFr1.160 trillion a year before; in the Americas business, the respective figures were $1.084 trillion from $1.087 trillion. The wealth business logged net inflows of SFr12.9 billion, changed from SFr34.4 billion. The Americas business logged net inflows of $21.4, from $10 billion, during the year.

Group results

Net profit attributable to shareholders in Q4 was SFr949 million, down from Sfr2.068 billion in Q3 2015.

General and administrative expenses rose by SFr128 million to SFr2.413 billion. On an adjusted basis, excluding restructuring charges, general and administrative expenses increased by SFr30 million. The fourth quarter included a charge of SFr166 million for the annual UK bank levy, as well as SFr45 million higher occupancy costs and SFr40 million higher professional fees.

The banking group’s cost/income ratio was 95.7 per cent.