UBS exceeded expectations for the first quarter of 2022 and said it had further reduced its exposure to Russia.
The Swiss bank on Tuesday reported a net profit attributable to shareholders of $ 2.136 billion, above the bank’s forecast of $ 1.79 billion.
This is an increase of 17% compared to the reported 1.82 dollars for the same period in 2021 and follows a decline in quarterly net profit to 1.35 billion dollars at the end of the year.
The bank had previously described its market risk exposure to Russia as “limited” and said on Tuesday that it had reduced its exposure to $ 0.4 billion as of March 31, compared to $ 0.6 billion at the end of 2021.
She also said she has no significant exposure to Ukraine or Belarus and is not doing new business in Russia or with Russian-based clients.
“Macroeconomic, geopolitical and market factors created high levels of uncertainty in the first quarter with Russia’s invasion of Ukraine, COVID-related restrictions and blockades, higher volatility, lower economic growth prospects and fears of higher inflation and response. monetary policy, “the bank said in a statement on Tuesday.
COFFRINI FACTORY AFP | Getty Images
Speaking to CNBC’s Jeff Cutmore on Tuesday, UBS CEO Ralph Hammers said: “It’s pretty unpredictable there.”
Here are some other key indicators for the quarter:
- Operating revenue was $ 9.36 billion, up from $ 8.71 billion a year ago.
- Return on tangible capital, a measure of profitability, amounted to 16%, compared to 14% a year ago.
- The CET 1 ratio, a measure of the bank’s solvency, is 14.3% against 15% at the end of 2021.
The company’s shares are trading at almost 2% higher shortly after the opening of markets in Europe.
The ECB is “a little late”
The main uncertainty on the horizon is how central banks will respond to higher inflation – and this could have a direct impact on banks’ performance.
“The ECB will take a closer look at what [U.S. Federal Reserve] does and the Fed is before the ECB. But also, [it’s] a little late, let’s be honest. So the ECB is also a little late because they don’t want … to be faster than the Fed, “Hammers told CNBC.
The European Central Bank has said it will end its asset purchase program in June, but has not yet given a precise timetable for when it could raise interest rates.
“We expect the first increase in interest rates by the ECB by the end of the year,” Hammers said.
Another problem facing the European economy is whether the war in Ukraine will drag it into recession. European leaders have imposed harsh sanctions on Russia and are considering additional measures to punish the Kremlin, including a possible ban on oil imports.
Asked whether sanctions on oil and natural gas against Russia could pose a risk to Europe, Hammers said: “Not so much for Russian oil, it’s different for Russian gas – a much bigger challenge, and that’s really because[s] industries depend on gas as their main commodity to produce their product … so this could have a second-tier effect, especially in the European economy. “
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