Profits plunge at UBS Warburg

INVESTMENT bank UBS Warburg today admitted to a virtual halving in first-quarter profits but said bankers' compensation had risen since last year. The business, an offshoot of Swiss bank UBS, reported a fall in pre-tax profits from Swfr905m (£389m) to Swfr492m.

The decline was due largely to continued troubles at the firm's private equity division. Problems in global equity markets also contributed to the poor figures. UBS Warburg chairman Marcus Granziol is leaving this year and will be replaced by current chief executive John Costas.

UBSW's core corporate and institutional clients' business saw pre-tax profits fall 20% compared with the first three months of 2001. Within the mix, fixed income and foreign exchange delivered strong increases in revenue although these failed to offset difficulties in the equity division. Corporate finance also put in a flat performance. Personnel expenses from the corporate and institutional division rose 3%, however, due to higher bonuses.

The parent bank said group results for 2002 would almost certainly show no improvement over last year. 'The market environment remains difficult,' said president Peter Wuffli.

UBS Capital's operating loss grew substantially from Swfr287m to Swfr462m, reflecting difficult conditions in private equity markets which led to increased write-downs and fewer exit opportunities. The division said losses would probably continue for several more quarters but expenses have been cut significantly. The parent group's net profit fell 14% to Swfr1.4bn but there were gains compared with the last three months of 2001.

UBS Global Asset Management, incorporating the old Phillips & Drew, saw profits fall from Swfr84m to Swfr75m. The business took in Swfr400m of new money between December 2001 and March of this year and profits rose marginally from the end of the 2001 fourth quarter.

UBS PaineWebber, the US broker acquired in 2000, delivered a loss of Swfr171m, up from a Swfr114m loss in the first quarter of last year. The business declined sharply through 2001 but is beginning to improve from its lows. Group expenses fell 9% as the bank cut back on technology spending, marketing, travel and entertainment.