GENEVA: Swiss banking giant UBS said Tuesday it is being squeezed by low interest rates, a strong Swiss franc and jittery investors staying out of the markets, warning that the underlying risks are unlikely to be resolved in the foreseeable future.
Swiss banking giant UBS said Tuesday it is being squeezed by low interest rates, a strong Swiss franc and jittery investors staying out of the markets, warning that the underlying risks are unlikely to be resolved in the foreseeable future.
UBS issued the warning as it reported that its net profit tumbled 64 percent from a year earlier to 707 million Swiss francs (€624 million, $742 million) in the first quarter of 2016.
Income slumped 22 percent to 6.8 billion Swiss francs in the same period.
A negative financial market, “substantial volatility”, and underlying economic and political uncertainty had frightened away investors, leading to “abnormally low” trading volumes in the first quarter, UBS said in a statement.
Though some factors had stabilized, the underlying economic and political risks were still scaring away investors, the bank said, adding that they are unlikely to resolved in the “foreseeable future”.
Low interest rates and the strength of the Swiss franc still presented headwinds, it said. In addition, changes to the international banking rules would likely require the bank to further raise its capital and costs.
“UBS continues to execute its strategy with discipline to mitigate these effects and is well positioned to benefit from even a moderate improvement in conditions,” UBS said.
