Grind the gap

28 April 2017 By George Hay Follow @gfhay

The Swiss bank trades at 1.3 times tangible book value, while its UK peer languishes at 0.7 times. First-quarter results, which saw UBS beat expectations and Barclays disappoint, support investors’ logic. But Barclays is on the mend, while wealth management is not trouble-free.

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UBS on April 28 announced revenue and pre-tax profit for the first quarter of 7.5 billion Swiss francs and 1.9 billion Swiss francs respectively, both beating consensus expectations.

The Swiss bank said pre-tax profit at its global wealth management division grew by 19 percent year-on-year to 1.05 billion Swiss francs. The unit attracted 20 billion Swiss francs of net new money, a measure that includes fresh client funds and outflows.

UBS earned an adjusted return on tangible equity of 12.6 percent for the quarter, against 8.6 percent in the first quarter of 2016.

Barclays reported first-quarter pre-tax profit of 1.7 billion pounds, up 112 percent year-on-year. However, the UK lender said fixed income trading revenue was 1 percent lower than a year ago. Equities trading revenue fell 10 percent while investment banking advisory income rose 51 percent.

The equivalent percentage changes for UBS’s investment banking activities were down 6 percent, up 2 percent and up 51 percent.

Barclays said group return on tangible equity was 9 percent, excluding the impact of an impairment of goodwill held in the African subsidiary it intends to sell. In the first quarter of 2016 ROTE was 3.8 percent.

As of 0830 BST, UBS shares were trading up 3.1 percent at 17.2 Swiss francs. Barclays shares were trading at 214 pence, down 4.4 percent.

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