UBS's Investment Bank Earnings Decline 63% on Equities Trading

  • Revenue from equities business fell 19% in fourth quarter
  • Foreign exchange, rates and credit revenue climbed 30%

UBS Group AG’s investment bank reported a 63 percent decline in fourth-quarter profit as equities trading slumped because clients shunned volatile markets.

Pretax profit at the unit run by Andrea Orcel fell to 80 million Swiss francs ($78.5 million) from 217 million francs a year earlier, UBS said in a statement on Tuesday. Revenue at UBS’s equities business, one of the biggest earners for the securities division, dropped 19 percent to 733 million francs.

UBS attributed the decline at the equities unit to “lower revenues in derivatives, as well as in cash.” Derivatives revenue fell because of weaker trading income and lower client activity, primarily in Europe, Middle East and Africa and Asia Pacific, the Zurich-based bank said.

Financial firms have been rocked by turbulence in Chinese markets, with plunging equity markets prompting authorities to intervene amid a deepening economic slowdown. Deutsche Bank AG reported a 28 percent decline in revenue from trading equities in the fourth quarter. The German firm also cited lower client activity in cash equities and said its equity derivatives unit faced “challenging risk management” in the quarter.

UBS said revenue from the corporate client solutions unit, which includes advisory and underwriting businesses, fell to 650 million francs from 704 million francs a year earlier. That was partly offset by revenue from foreign exchange, rates and credit, which climbed 30 percent to 388 million francs in the quarter.

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