UBS’s Ermotti Expects to Add $50 Billion of Assets This Yearby
Growth to be in line with previous years, CEO say in Davos
‘The U.S. is a promising market for us,’ he says in interview
UBS Group AG’s Sergio Ermotti said he expects to add about $50 billion across wealth management and asset management this year as low interest rates limit how much new business Switzerland’s biggest bank takes on.
Growth will be “in line with what we did in the last few years,” he said in an interview with Bloomberg’s Francine Lacqua at the World Economic Forum in Davos. “In those numbers there’s a lot of noise from clients changing their risk profile, their booking centers and so on.”
Ermotti said the bank is selective in what new money it accepts, as low and negative interest rates have eroded banks’ profitability. Clients have also been less willing to use borrowed money to leverage their investments, he said, weighing on inflows.
With interest rates in the U.S. rising, bank executives at Davos have expressed some optimism about 2017. Tidjane Thiam, head of Credit Suisse Group AG, said yesterday that higher rates should benefit banks, and UBS Chairman Axel Weber said he was “quite optimistic” about 2017.
There “is clearly a U.S. momentum,” Ermotti said. “The U.S. is a promising market for us.”
UBS’s wealth management unit reported adjusted net new money inflows of 22.8 billion francs ($22.8 billion) in 2015, and wealth management Americas added $21.3 billion. The Asset Management unit suffered outflows.
Switzerland’s biggest bank retreated from large parts of investment banking in late 2012, seeking a more stable, less risky source of income. Investors have piled into UBS since its revamp, enticed by its policy of returning at least half its profit to shareholders. While Ermotti has reaffirmed the practice, the bank is also building capital to comply with new Swiss rules and support growth.