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 (5), supporting earnings. Clients are more active, which should lead to an improvement in transaction-related revenues (6). Higher asset prices should have a positive effect on recurring fee income (7) in our asset gathering businesses. Low and persistently negative interest rates and expectations of continuing easy monetary policy (B) will continue to provide some headwinds to net interest income. (8)


(OSI*) As we execute on our strategy, we are balancing investments to take advantage of opportunities for growth across our businesses and regions, while managing for efficiency. We remain committed to delivering on our financial targets, creating further value through even closer collaboration across all divisions to drive sustainable long-term value for our clients and shareholders . (Bullshit talk)

(OSI) = Open Source Information (*4q19-media-release-en.pdf)

Assessment:

Absolutely nothing in the UBS outlook press release (quoted above) is company specific or indicative of any management decisions having an effect on the results. All factors named in their outlook are related to central banks, interest rates, asset prices, global economic growth and seasonality. The management and supervisory board is currently neither inspiring nor showing any visible skill at managing the future of UBS, to be blunt.

With an investment in UBS you are betting on continued asset bubble inflating by central banks and a global economy not shrinking. Management has given absolutely no indication of actually doing anything company specific, in their published outlook. Very poor. In addition the potentially multi-billion fine from UBS France is hanging over the prospects of the stock. Incidentally one of the only metrics that management could have actually influenced in a positive or decisive way was and is the pending fine. There managment made a high risk decision.

None of this is new of course, so assume it to be discounted in the stock price and there is reason to believe it is actually a cheap stock, based on PE ratio. Of course the price will oscillate with news about trade deals, next IPO wave, new and pending court case related fines and the global economy.

Contrast that with JPMorgan:

JPMorgan Chase wants a bigger piece of the wealth management pie and this week provided some ideas on how it plans to get it.

So reports On Wall Street, which covered the bank’s recent investor day presentation.

Like its big-bank rivals, JPMorgan Chase has been taking steps to be able serve clients at all wealth rungs—and to do so digitally or with a human touch. Last year it launched an online investing platform, You Invest. And the bank plans to continue investing in technology—to the tune of $1 billion a year—including on artificial intelligence and machine learning.

About 90% of the clients using You Invest are investing with the bank for the first time, On Wall Street writes. They may eventually need human advice.

“As much as we think everyone wants to do it all from their home on their iPhone, it eventually becomes complicated enough that you want to talk to someone,” said Mary Callahan Erdoes, CEO of the company’s wealth and asset management unit.

The bank plans to add to its ranks of U.S. brokers, who currently number about 3,700, and one key area of growth is the eastern U.S.

Meanwhile, there’s plenty of opportunity in getting high-net-worth individuals who have banking relationships with JPMorgan Chase to choose the company to manage their investments too, Erdoes said.

She said there’s an estimated 22 million people with $1 million to $10 million. About half of them bank with JPMorgan Chase, but only 5% rely on the company for investment management.

“We still have 95% to make in roads to. And when we add investments to what we do with clients, then on average the deposits double and the overall share of their wallet triples,” Erdoes was quoted saying. “If we added just another 5%, it would be another $2 billion in revenue for this firm.”

source: Barrons, 27.02.2020

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