UBS shares tumble after volatile Q4 triggers big wealth management outflows

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  • Wealth management business takes a hit
  • Stock drops 22%
  • Company cites macro events as cause

UBS Group shares saw a marked drop as the biggest investment bank in Switzerland revealed fourth-quarter earnings that were lower than expected. The main reason for the shortfall was under-performance in its wealth management business, which is a key component of the company.

UBS Wealth management profits dropped to $769 million, a fall of 22%. The stock was marked 4.66% down at Sfr12.79 a share, continuing a downward trend that has been going on for three months.

UBS Group AG shares fell as nearly $8 billion in net client outflows were reported from the company’s wealth management division. However, UBS is not alone in the sector when it comes to disappointing reports as record withdrawals from investment funds took place in the U.S. and elsewhere in the last three months of 2018.

UBS CEO Sergio Ermotti commented: “In wealth management, of course, when I look at our results, they are not up to our expectations or ambitions, but when you look region by region in Asia, you still see 5% year-on-year growth despite the risk-averse sentiment from clients.”

“If I look at the U.S., we had net outflows, but if I look at invested assets, we have been performing better than our peers,” he added.

Ermotti went on to point out that there had been a general move in Q4 last year toward less leverage and more people going into cash.

A UBS statement forecast that a “lack of progress in resolving geopolitical tensions, rising protectionism and trade disputes along with increased volatility, which affected investor sentiment and confidence in the second half of the year and particularly in the fourth quarter of 2018, would affect client activity in the first quarter of 2019.”

Brian Ducey

Brian graduated from Chaminade High School and the University Of Vermont Kalkin School Of Business with a concentration in Finance. He began his career with Knight Capital Markets, working his way to market maker. Brian later expanded his market repertoire, working with various sell-side research brokerage firms, such as Sidoti & Co., and William O’Neill & Co., as an Account Executive. With over 20 years-experience in the financial industry, Brian has built a unique perspective into “market intelligence” understanding an ability to read the tape and apply second level thinking in a fast paced environment. Brian also carried several market licenses, including the series 7, 24, 55, 65, and 63 licenses as well as previously passing The Connecticut Life and Health Insurance Exam