UBS Q1 Profit Falls; Warns On Challenges; Stock Dips

(RTTNews) - Shares of UBS AG (UBS) were losing around 5 percent in the morning trading after the Swiss financial services giant reported Tuesday sharply lower profit in its first quarter amid lower net fee and commission as well as trading income. Net interest income, however, improved from last year.

Looking ahead, the company said that the ongoing underlying macroeconomic challenges and geopolitical risks continue to contribute to client risk aversion and are unlikely to be resolved in the foreseeable future. Low interest rates, and the relative strength of the Swiss franc, particularly against the euro, continue to present headwinds.

Further, the proposed changes to the Swiss and international regulatory framework for banks will result in increased capital requirements and costs.

The first-quarter net profit attributable to shareholders declined 64 percent to 707 million Swiss francs or 0.18 franc per share from last year's 1.98 billion francs or 0.53 franc per share.

The company delivered an adjusted profit before tax of 1.366 billion francs.

Operating profit plunged 64 percent to 978 million francs from 2.708 billion francs last year. Total operating income fell 23 percent to 6.833 billion francs, of which net interest and trading income declined 28 percent.

Net interest income, however, grew 5 percent to 1.71 billion francs from 1.637 billion francs a year ago.

Net fee and commission income dropped 7 percent to 4.09 billion francs and net trading income fell 53 percent to 1.01 billion francs.

UBS said, "Negative market performance, substantial volatility, as well as underlying macroeconomic and geopolitical uncertainty, led to more pronounced client risk aversion and abnormally low transaction volumes in the first quarter."

The company said it is on course to achieve its target of 2.1 billion francs net cost reductions by year-end 2017.

As announced earlier, UBS's Board of Directors proposed to shareholders to pay an ordinary dividend of 0.60 franc per share, as well as a special dividend of 0.25 franc per share, for the year 2015. The UBS Annual General Meeting is scheduled on May 10.

In Zurich, UBS shares were trading at 15.77 francs, down 4.60 percent.