UBS Wealth Management profit hits record in second quarter
UBS Wealth Management Americas more than doubled its pre-tax operating profit, despite losing 136 financial advisers from the previous year.
The wire house reached a record pre-tax income of $ 505 million after its reduced staff of 6,274 advisers generated new net advisory assets of $ 13.5 billion, UBS said in disclosing its second quarter. earnings July 20. The company does not separate its specific US metrics from those of Canada and Latin America in the Americas segment of its Global Wealth Management unit, but available numbers show substantial increases in advisor productivity.
- Annual revenue per advisor climbed 29% to $ 1.7 million. As part of the large influx of new advisory assets, the unit generated $ 8.3 billion in cash flows to the company’s separately managed accounts as part of an expansion since Last year fund families offered to UBS clients without management fees. The unit’s total invested assets jumped 26% year-on-year to $ 1.7 trillion.
- The unit lent $ 5.3 billion in new loans and exceeded $ 83 billion in loans, compared to $ 1.3 billion in new loans out of a total of $ 64 billion in loans in the same period. last year. Most of the new loans in the second quarter were Lombard asset-backed loans, in which clients pledge securities or insurance policies as collateral. The wire house did not disclose its consulting assets in the second quarter of 2020, but commission-earning assets were up 7% from the first quarter to $ 845 billion. The build-up in stock value of $ 38 billion largely contributed to the increase in assets under management.
- Part of a multi-year trend since the firm changed its recruitment strategy in 2016, the ranks of advisers were down 2% year-on-year in the second quarter. Recruitment loans to financial advisers in the Americas fell 6% to $ 1.8 billion. Advisors who have become independent from transmission companies like UBS have reduced the number of advisers in the sector in recent years.
- UBS Wealth Management Americas profit increased 122% year-over-year thanks to the inflow of advice, new loans and adviser productivity. The increase in revenue from advisory accounts and transactions resulted in a 30% increase in revenue from the same period in 2020 to $ 2.6 billion, which more than offset $ 320 million in expenses. higher operating income from compensation paid to firm advisers, among other areas.
- In a conference call with analysts following the publication of his results by UBS, CEO Ralph Hamers identified new net advisory assets and loans as “critical overall performance indicators” that the company has made clear to its employees. advisers, according to to a Seeking Alpha transcript. “We’re actually happy to see FA comp increase, because that means revenues go up,” Hamers said. “But most importantly, if you look at activity in the United States, our overall cost-to-income ratio has fallen almost six percentage points year over year. So what you see is that yes there is more compensable income, but we are leveraging from that. Also, and very importantly, we are seeing higher loan levels in net interest income, which in fact pays very little to the grid. And so it has a much higher margin overall.