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UBP strengthens its business model, reports a net profit of $209m, AuM of $72bn

Thursday, January 28, 2010
Opalesque Industry Updates - Union Bancaire Privée (UBP) announced a net profit of CHF 216 million (USD 209 million) for the 2009 financial year. Assets under management totalled CHF 75 billion (USD 72 billion) as at 31 December 2009, against CHF 100 billion (USD 95 billion) at the end of 2008, as a result of the contraction in the institutional and alternative-asset-management industries and the adverse effects of exchange rates.

These results were partially offset by the CHF 6.7 billion (USD 6.5 billion) in net capital inflows from private clients, with a significant proportion from emerging markets. Due to the careful management of risk and of the balance sheet, UBP continues to enjoy a solid financial base and a Tier 1 ratio of 26.4%.

“Our ability to adapt has allowed us to maintain our profit margins in markets that remain unstable”, underlines Guy de Picciotto, UBP’s CEO. “In the first half of the year, we concentrated on preserving our clients’ capital and reducing costs. Subsequently, we redeveloped our business activity by reinforcing our management and strengthening our risk-management abilities. We adapted our business model so that it now includes four main divisions: Private Banking, Asset Management, Treasury and Operations.”

Maintaining profit-earning capacity
For the 2009 financial year, UBP realised a consolidated net profit of CHF 216 million. Despite extremely volatile markets and the financial systems’ instability, UBP continues to attract new clients, from emerging markets amongst others and net capital inflows from private clients totaled CHF 6.7 billion in 2009. As at 31 December, 2009 assets under management were CHF 75 billion, versus CHF 100 billion at the end of 2008. Challenging market conditions and the contraction of the industry hampered alternative asset management, whose assets stood at CHF 19.45 billion, versus CHF 45.45 billion for the 2008 financial year.

Income was at CHF 806 million for the year, versus CHF 1.15 billion in 2008. Trading income stood at CHF 138 million (versus CHF 114 million for the previous year), which represents a 21% rise, reflecting favourable market conditions. Costs were brought under control in all sectors, allowing operating expenses to be reduced by more than 11% to CHF 498 million (versus CHF 561 million for 2008). The Group’s consolidated cost/income ratio is 66.9% after amortisation. Adequate provisions for matters associated with the fraud perpetrated by B. Madoff were made.

Healthy balance sheet and a solid financial base
The balance sheet total reached CHF 20 billion and the return on shareholder equity for the 2009 financial year is 12%. Overall, the balance sheet remained stable and is characterised foremost by excellent liquidity and an equivalent reduction in risk. Indeed, liquidity has risen from CHF 1.6 billion in 2008 to CHF 6.8 billion in 2009, whilst amounts due to clients remain almost unchanged at CHF 16.3 billion. By pursuing a conservative approach to risk-management, UBP has been able to maintain a solid financial base and post a strong and debt-free balance sheet. With a Tier 1 capital ratio of 26.4%, which is more than three times the minimum legal requirement of 8%, UBP is one of the best-capitalised banks in Switzerland.

A reformed business model
The financial crisis and its economic and political consequences will have a structural effect on banks’ activity, including that of asset-management banks. This is the result of regulatory changes currently underway and changes being imposed upon the Swiss financial centre from outside. In light of these circumstances, UBP has adapted its business model and reshaped its organisation in order to continue growing; this includes hiring leading professionals and developing its IT infrastructure. The Bank’s activities have been restructured into four global divisions: Private Banking, Asset Management, Treasury and Operations.

As a global asset manager, UBP is committed to providing innovative investment solutions which are adapted to this new environment and committed to the highest levels of service quality and transparency. The synergies that have been created by this dynamic reorganisation are allowing UBP to face the future with confidence and to continue to seize the best investment opportunities for its clients. Corporate website: www.UBP.ch

- FG

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