UBS: Ermotti warns Q1 woes may persist
Little confidence profit warning relates to one-off; cost cuts not enough to compensate.
Sergio Ermotti, chief executive of UBS, has struck a downbeat note about the chances for a rebound in performance during an interview with Euromoney, after what amounts to a profit warning for the first quarter.
UBS took the unusual step of publishing Ermotti’s comments at last week’s Morgan Stanley European financials conference in London, which is closed to the press. He estimated that first-quarter investment banking revenues would be down by a third.
Ermotti’s assertion that the environment in the first quarter, especially outside the US, was “one of the worst” in recent history helped push its share price down 5% last week, underlining sinking sentiment across the banking sector in Europe.
Speaking to Ermotti in advance of Euromoney’s official 50th anniversary edition, we asked how confident he could be that first-quarter conditions were a one-off. Ermotti warned that there was little that banks can do to boost profits in the short term, while lower economic growth is weighing on net interest margins, as well as fees, as firms’ appetite for investment and demand for growth capital slumps.
“The economy has to grow, and in a predictable way,” he said.