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.
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:
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.