Magical realism

17 November 2010 By Nicholas Paisner

The Swiss bank needs to increase revenue by almost a third from this year’s run rate to meet its ambitious pretax profit goals. Without a sustained market rebound, many of the targets still look overoptimistic. But if UBS gets close, its shares will begin to look very cheap.

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At its investor day on Nov. 16, UBS reiterated the mediumterm targets it set a year ago. The bank defines "medium term" as the next two to four years.

UBS intends to make approximately 15 billion Swiss francs of pretax profit, compared to the 8.3 billion Swiss francs it has earned on an annualised basis in the first nine months of 2010.

Under the plan, the investment bank is expected to generate around 6 billion Swiss francs of pretax profit. To meet that target, UBS envisages increasing investment banking revenue to approximately 20 billion Swiss francs, compared to an annualised 13 billion Swiss francs this year.

The wealth management and Swiss banking operations are expected to generate 7.5 billion Swiss francs of pretax profit, compared to an annualised 5.0 billion Swiss francs in the first nine months. The bank believes its asset management division can generate 1.3 billion Swiss francs of pretax profit, compared to an annualised 0.5 billion Swiss francs this year.

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