UBS Outlook as of January 2020

Outlook (OSI*) Stimulus measures and easing of monetary policy (A) by central banks (1) contributed to a strong performance in financial markets in the fourth quarter and are likely to prevail. A favorable credit environment (2) and a partial resolution of trade disputes (3) should mitigate slowing global economic growth (4). (OSI*) While the macroeconomic and geopolitical situation remains uncertain, (Bullshit) for the first quarter we expect more typical seasonality…

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Was bedeutet die Milliardenbusse 2019 in Frankreich für die Aktionäre der UBS Group

Hintergrund, Fakten: Die UBS hat 3,856 Millirden Aktien ausstehend (gemäss SIX: 3’856’061’422). Der aktuelle Kurs (per 23.02.2019) ist bei ca. CHF 12.40. Daraus folgt: Die UBS hat eine Börsenkapitalisierung von CHF 47,8 Mrd.2019 ist der Rückkauf von Aktien in Höhe von bis zu USD 1,000 Milliarde geplant. Das sind 20% des Jahresgewinnes 2018.2019 ist für 2018 die Ausschüttung von CHF 2,699 Mrd via Dividende vorgesehen (CHF 0,70/Aktie). Das sind 55%…

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ECB data shows Italy, France, Greece, Spain most active propping up their bond markets

Looking at this data showing central banks most active propping up bonds in the euro area and the comparing to what “pure play private banks” like Julius Baer hold on their balance sheet does make you wonder about the sustainability of the ECB purchases and what effect it has on the bond market. The data below shows what Julius Baer invests billions in. Especially debt instruments and there financial institution…

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UBS Results: The Headwinds and The Green Shoots

The interest rate environment is dampening the business model which relies on “net interest income” , as can clearly be seen above (marked red). Luckily for banks in general and UBS in particular,  loyal customers aren’t putting stronger pressure on fees and commissions. Own fund business schrinking and lighter customer activity are lowering commissions slight as can be seen in “net fee and commission income”. A noteworthy positive is the…

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Credit Suisse underlying business – 2Q16 results

You can’t be much else than shocked by the dramatic revenue drops. This is the unfiltered story, no PR-talk, no salesman talk, just facts and figures: Credit Suisse 2Q16 1Q16 2Q15 Down Net interest income 1’999 2’011 2’869 -30.32% Commission and fees 2’796 2’675 3’259 -14.21% Trading revenues 94 -271 498 -81.12% Other revenues 219 223 329 -33.43%     Then compare it to expenses: All small moves. Compensation and…

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Pure Play Swiss Private Bank (Julius Baer – Vontobel)

In the H1 report Julius Baer is described as a pure play private bank. That’s why I thought it may be useful for discussions to know what this business model entails. Where do the profits in a pure play private bank come from? According to my calculations ** 22% from interest income (8% at Vontobel) 38% from management and fund fees (55% at Vontobel) 16% from commission (~client trading) (12%…

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Julius Baer Structured Products & Dividend Games Very Profitable, Only in H1 Always

I find it rather interesting that dividend income from trading portfolios (CHF 180m, 121.9) and net trading losses on equity instruments (CHF 126m ; CHF 104m) only happen during the swiss dividend paying season. The profit margin between the dividend income on trading portfolios and the equity losses on trading are 15-30%. As a sidenote: withholding tax is 35%. Also: Dividends in Switzerland are mainly in H1. The dividend trading income…

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Credit Suisse credit agency ratings – near problem area?

The comparison below is interesting for short-term ratings. Credit Suisse and SocGen would lose the A1 Short Term rating with the next step. Now why is this important? Many multi-billion pension funds are forced to move their liquidity from banks that lose the A1 Short Term rating. That will mean a drain on liquidity, which in turn leads to furth problems. Also the rating impact by itself can already cost…

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Credit Suisse business model flaws – high interest costs

Outstanding capital insturments of Credit Suisse according to this presentation. According to my calculations (see table below) Credit Suisse pays over CHF 1 bn per year in interest rate costs alone. The coupon they need to pay is high. High risks demand high coupon. So much profit has to be generated to just cover fixed costs. At the same time more and more peer-to-peer lending business models are springing up, robo-advisors,…

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How safe is Credit Suisse?

According to the above presentation for fixed income investors of Credit Suisse the bank is less dependent on counterparty funding. Instead it has core customer deposits and long-term debt making up a larger proportion of balance sheet. I don’t like this statement of the Credit Suisse CEO today (Interview with NZZ): He’s asked are customer deposits (so crucial according to the above graph) leaving Credit Suisse in last days, weeks….