Tuesday, May 15, 2012

UBS (UBS) Led by Wealth Management Unit

Led by its wealth management unit, UBS (NYSE:UBS) reported solid earnings for its latest quarter. The division generated a pre-tax profit of $866 million for the quarter, up 70 percent over the prior quarter, and a 24 percent improvement for the same period last year.

This bodes well for the financial institution, as wealth management is a far more predictable business than sales & trading, which has recently crushed JPMorgan (NYSE:JPM) with a $2 billion loss and fading confidence in the company.

Another good sign for UBS is its exposure to the wealth management business, which accounts for an estimated 40 percent of its share price. On the other hand, JPMorgan is estimated to have only 10 percent of its share price associated with wealth management, making it far less predictable, and more volatile as well.

The good performance from the unit of UBS comes from shrinking expenses as a result of changes made in relationship to employee pension plans.

Also contributing to profits was the performance of the wealth management unit in North and South America, where pre-tax profits rose by 34 percent to $225 million from the previous quarter.

That's not to say the sales & trading of the division tanked, as it still generated $1.1 billion in earnings for the period. Overall, the unit landed $1.6 billion in revenue for the quarter.

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