Ralph Hamers, who took over the management of UBS Group AG in November. REUTERS / Arnd Wiegmann
UBS Wealth Management Americas posted record earnings and positive net client flows in the fourth quarter, although the number of advisors continued to decline.
The Americas Wealth business, which includes approximately 6,000 consultants in the US and several hundred in Latin America and Canada, earned $ 386 million in the quarter, up 54% from $ 251 million a year earlier. The higher results were due to growth in chargeable revenue from higher client assets, the release of credit losses, and an increase in transaction-based income, the company said.
UBS officials said the performance underscores the strategy shift implemented almost four years ago in America under Global Wealth division co-head Tom Naratil. Along with co-head Iqbal Khan, he has focused on growing margins in America by reducing the hiring of expensive veteran brokers and increasing productivity among a smaller group of consultants.
UBS’s headcount in America, less than half that of its Wirehouse peers, declined to 6,305 in the last three months of the year, a net decrease of 48, and a decrease of 244, or 3.7 % up from 6,549 in the fourth quarter of 2020. The total number of US based companies has fallen from more than 8,000 nearly 10 years ago to under 6,000. This is based on internal numbers given by brokers.
The brokerage force has continued to shrink, although UBS revived some of its recruiting efforts over the past year and focused on hiring large teams from private banks or firms outside of the wirehouse pool.
The Americas continued to be the most profitable of the four regions in the Global Wealth unit and helped lead the division into its most profitable year. UBS CEO Ralph Hamers praised her in his first quarterly earnings call since he took office in November.
« Tom and Iqbal have repositioned Global Wealth Management to get closer to our clients and offer them tailored solutions and more features from UBS, » said Hamers, who was previously CEO of ING Group. « This focus clearly pays off in GWM’s annual results. »
America-based brokers also continued to reverse the multi-year trend of negative net new money in the quarter. The brokers added $ 1.4 billion in client assets for the quarter, compared to a loss of $ 9 billion in the year-ago quarter as the company posted positive net inflows in three out of four quarters last year.
However, that was still well below UBS’s wirehouse competitors including Morgan Stanley Wealth Management, who reported last week that their 15,900 brokers attracted $ 66.1 billion in net new money. Bank of America’s Global Wealth division, which includes approximately 14,000 Merrill brokers and an additional 5,000 private bankers and brokers, posted net paid inflows of $ 7.6 billion for the quarter.
UBS’s Wealth Americas unit increased client assets by 12% to $ 1.57 trillion. Almost 40% of the assets were in paid accounts, the company said.
Loans increased 5% sequentially to $ 72 billion as customers added $ 3.4 billion in net debt during the quarter, which helped offset losses in net interest income from lower US interest rates.
UBS also noted that the company’s “zero management fee” move pays off on its own separately managed accounts as UBS Asset Management received an additional $ 26.5 billion in net new money from wealthy clients in the quarter, which is a grand total of USD 62 billion since inception corresponds to the end of 2019.
The company’s move to billing average daily customer balance in the fourth quarter also helped improve performance in America, the company said.
UBS stock was trading at $ 14.91, up 2.62% from 12:23 PM after the company announced it would buy back $ 4.5 billion of shares over the next three years.