UBS Becomes Latest Lender Stung by Drop in Equities RevenueBy and
Stocks revenues down 22 percent to 878 million Swiss francs
Barclays posts 31 percent decline in equities revenue
UBS Group AG, the Swiss lender seeking to expand in China, became the latest European bank to post a decline at its equities business, partly hurt by a slowdown in trading in the Asia Pacific region.
The Swiss bank follows competitors including Barclays Plc, BNP Paribas SA and Deutsche Bank AG in reporting lower income from stocks in the second quarter. Equities revenue at UBS fell 22 percent to 878 million Swiss francs ($896 million) from a year earlier, while income from equity capital markets tumbled 42 percent to 195 million francs.
Equities revenue declined “across all products, particularly in Asia Pacific,” the Zurich-based bank said in a statement on Friday, when reporting a 14 percent drop in second-quarter profit. The equity-markets decrease was “mainly due to lower revenues from public offerings in” the region, it said.
Chinese stocks have lost more than $4 trillion of value since their 2015 peak in June. Revenue from trading stocks in China and Hong Kong could fall 30 percent to 50 percent in the first half from a year earlier, according to senior executives at four firms who spoke on condition of anonymity last month.
UBS plans to double revenue from its equities business in China over the next five years by expanding into margin finance, short-selling and derivatives, Thomas Fang, the firm’s head of China equities, said at a briefing in Shanghai in January. The firm will add about 100 people to that business over the period, Fang said.
Barclays reported on Friday that equities revenue declined by almost a third to 406 million pounds ($535 million) in the quarter. Deutsche Bank said earlier this week that equity trading revenue fell 31 percent to 720 million euros ($798 million) from a year earlier.
UBS generated the most fees from investment banking in China among foreign firms in 2015 at $81 million, followed by Deutsche Bank, Morgan Stanley and JPMorgan Chase & Co., according to data compiled by Freeman & Co.