Written by Brenda Nakalema

UBS Beats Expectations as HSBC Profits Dive

The first quarter saw UBS hammer expectations, led by its trading division amid high market volatility. The company managed to …

The first quarter saw UBS hammer expectations, led by its trading division amid high market volatility. The company managed to reduce its exposure to Russia in the wake of the Ukraine invasion but still suffered a 7% decline in its wealth management division due to a reduction in business from its clients in Asia. Despite this good performance, it’s not likely that others in the market will be able to follow suit.

This performance stood in stark contrast when compared to HSBC (ticker: HSBC), whose business is heavily Asia-focused, with the result that profits fell substantially in the first three months of the year. The bank was greatly set back because of potential defaults as its customers’ cost of living rose quickly. Its wealth management business was also hit badly due to the pandemic lockdowns in China.

UBS’s outlook seems positive in comparison. And although rising interest rates will benefit commercial lenders this year, the triple threat brought on by prolonged war, Covid flare-ups and rapid inflation will continue to make its business difficult.

“The group help up well in a challenging environment, and this will likely only become more evident with reporting of European peer,” Deutsche Bank analysts Benjamin Goy and Sharath Kumar said. Still, “this set of results might not be a positive impulse for the stock today.”