Monthly Archives: April 2013

UBS Q1 2013 by Business Unit

I’m a visual learner, so mapping out numbers on a chart always gives me a better feel of what’s happening. It’s also easier to present to clients and prospects with graphs and charts.

This graph left me thinking; is UBS really using a comparison friendly approach with the unit “Corporate Center”. It seems odd to look at the individual business units such as Retail, IB, WM etc if a large chunk of the P&L are occuring in “Corporate Center”.

On the bright side and as can be seen by the net change in green, it’s looking better across the board, except in Retail & Corporate.

UBS by Business Unit 2013

Corporate Center: “The first quarter included lower charges for provisions for litigation, regulatory and similar matters and an own credit loss of CHF 181 million compared with a loss of CHF 414 million in the fourth quarter of 2012.” source: UBS media release

Here an excerpt from the income statement:

UBS Income Statement Q1 2013

A possible deduction looking at the Investment Banking (IB) business unit result and then comparing it with income statement: Considering M&A and underwriting are the historical core competences of an investment bank and not much of that has been happening, the result of the investment bank must be due to the ancillary services such as market making, trading of derivatives and equity securities, and FICC services (fixed income instruments, currencies, and commodities).

If we look at definitions of IB in the US

“SEC filings of the major independent investment banks such as Goldman Sachs and Morgan Stanley reflect three product segments: (1) investment banking (fees for M&A advisory services and securities underwriting); (2) asset management (fees for sponsored investment funds), and (3) trading and principal investments (broker-dealer activities including proprietary trading (“dealer” transactions) and brokerage trading (“broker” transactions))”

and again compare income and P&L in the graphs above with reality one could say that the product segment asset managment can’t be responsible for the large swings (or when was the last time fund fees changed from quarter to quarter in such a meaningful way?). And advisory and securities underwriting can’t be the source of such large swings either, in my opinion. I’d expect a gradual increase as the world economy were picking up or a correlation to the new issues on markets. So that leaves trading and principal investments. The infamous casino investment banking with volatile results and high litigation and fine risk. The fines which then get put in the “trashcan” Corporate Center in the case of UBS.

Housing Bubble in Norway?

These remarks out from S&P late on Friday regarding Norway caught my eye:

A possible short-term risk is the vulnerability of households’ debt-servicing capacity to increased interest rates or a correction in house prices. Average house prices have increased by more than 50% since 2005, and by 8% on average over the past three years. Prices are now 190% of the 1992-2012 average, substantially higher than Nordic peers. Household debt is about 200% of disposable income (165% in 2004) but this ratio is not evenly distributed. About one quarter of households have debt exceeding their disposable income by three times. These households also tend to own fewer financial assets than those with lower leverage, exacerbating their vulnerability to adverse economic developments.

I hope to find some numbers to be able to compare with the situation in Switzerland. One must assume that the vulnerability of households to an interest rate hike, however unlikely it currently seems, is a major factor for concern in both countries in the mid- to long-term.

The paragraph below taken from the S&P report also reminds me strongly of issues and mechanics we are facing in Switzerland, namely twin effects of strong exchange rate and high wage levels. The latter could be further exasterbated by the looming “Mindestlohninitiative” / minimum wage vote.

The economy also faces some longer-term challenges. First, the non-oil sector risks a further loss of external competitiveness, over time, through the twin effects of a strong exchange rate and high wage levels. This, combined with the increasing dependence of the Norwegian economy on the petroleum sector, will increase Norway’s vulnerability to a sustained oil price shock. We believe that these factors will become increasingly relevant once petroleum production starts to decline.

The bright spot for Switzerland: Thanks to pharma, banking, biotech and other sectors we are not exposed to a particular sector the way Norway is. Considering how large the fines imposed on the swiss banking sector were and how many jobs were axed in investment banks and how the banking secrecy laws have been compromised, the net effect on the economy has hardly been felt.

Austerity Isn’t Dead – Reinhart-Rogoff Aren’t Wrong

Some good analysis regarding austerity and the impact it has on GDP growth I read just now on Marketwatch by Brett Arends..

Part 1 I found interesting

One critique of Reinhart-Rogoff is that it doesn’t give enough weight to the case of New Zealand right after World War II. Apparently, New Zealand had high debts, yet grew very quickly in the late 1940s. Yet what does this prove? New Zealand was basically a giant farm floating in the Pacific, far away from all the fighting of the war. After 1945, everyone needed food and wool. Europe, Japan, and other places, struggling to get back on their feet after six devastating years of war, didn’t have much. New Zealand’s exports soared, and its economy boomed. What on earth does that tell us about debt levels and growth? What possible relevance does that have to our situation today?


Part 2 I found most interesting

Economies with government debt over 90% grew by just 2.2% a year on average, considerably more slowly than those with lower levels of debt. Economies with medium-size debts, between 30% and 90% of GDP, grew by just over 3% a year, on average. Those with low levels of debt, below 30% of GDP, boomed by more than 4%, they found. In other words, according to Herndon, Ash and Pollin, high-debt economies (over 90% of GDP) grew at barely half the speed of low-debt economies (below 30%). So the Reinhart-Rogoff argument still has a lot of teeth.


Brett Arends for MarketWatch and also on Twitter @BrettArends

Nestlé Sales by Product Group Q1 2012 vs Q1 2013

Nestlé today published Q1 figures. As I was interested to see which product groups are growing fastest or most attractive, illustrated by M&A acitivity on the behalf of Nestlé, I threw this graph together:

Nestlé Sales by Product – Q1 2013

Graph: Zuberbuehler Associates AG

Interesting to see where Nestlé is growing sales most substantially (both organic and through M&A activity) – as can be seen by the green bar:  1. Nutrition & Health Care 2. Pet Care 3. Powdered and liquid beverages.

Helpful CIIA Exam Preparation Videos

Recently I’ve been preparing for the CIIA Exam (that’s the Certified International Investment Analyst) and found that video tutorials posted on youtube can be a nice audio-visual help. If you don’t visit all lectures or need another take the following links I’ll post should prove helpful, as they allow you to take it all in at the most convient time for your learning and biological rythm:



I’ll post more as I progress through the material…

I’m always interested in hearing feedback with regard to any CIIA topics ranging from Economics to Equity to Portfolio Theory etc…

Geberit shareholders vote on remuneration: 48% say NO

Surprisingly massive no votes on the Agenda item regarding the remunerations for 2012 at the Geberit AGM today. You’d think that managers would act on such a strong sign of displeasure on behalf of such a massive proportion of the shareholders.

Consultative vote on the remuneration system and the remunerations for 2012

Valid votes Absolute majority Yes votes No votes Abstentions Votes not submitted


22’257’674 11’128’838 11’626’493 10’631’181 705’760 5’368