Following a huge loss for the third quarter, Swiss financial giant UBS AG (UBS), on Tuesday revealed its strategy to return to profitability and meet medium-term financial targets. Zurich, switzerland-based UBS said it aims to achieve the targets over the next three to five years.
Speaking at the investor meet, Oswald Grübel, Chief Executive Officer, UBS Group said, "We are building a new UBS: one that performs to the highest standards and behaves with integrity and honesty; one that distinguishes itself not only through the clarity and reliability of the advice and services it provides but in how it manages and executes. "
Over the medium term, UBS said it expects to achieve a pre-tax profit of around CHF 15 billion, a cost-to-income ratio of 65% - 70%, and a return-on-equity of 15% - 20%.
The company said integration will be the underlying force of the new UBS and said it expects to achieve higher revenues and gross margins by reversing client outflows, enhancing investment performance and delivering the integrated firm to clients in a structured and consistent manner.
UBS indicated rebuilding of the Fixed Income, Currencies and Commodities, or FICC, business as central to the continuing recovery of its Investment Bank division. The FICC business intents to yield medium-term quarterly revenues of more than CHF 2 billion on a normalized basis, reflecting significantly increased contributions from foreign exchange and money market, rates and emerging markets, and a modestly increased contribution from the credit business.
The company noted that it equities business is targeting medium-term normalized quarterly revenues of more than CHF 1.75 billion, while Investment Banking Department aims to generate quarterly revenues of more than CHF 1 billion.
UBS's Global Asset Management division anticipates net new money to be positive starting in 2010 and expects that the proportion of its business from third parties would rise in the medium term.
The company stated that it Wealth Management Americas business currently has a solid base with around CHF 694 billion of invested assets. Looking ahead, Wealth Management Americas will position itself as an advice-led Financial advisors, or FA, platform through improved FA productivity, a focus on the ultra high net worth and high net worth segments and disciplined management resulting in increased profitability.
The recent appointment of former Meryll Lynch executive Robert McCann as chairman and chief executive officer of Wealth Management Americas, emphasizes the importance of this division. The company said that within weeks of his appointment, McCann built around a renewal team focused on strategically re-engineering all aspects of the business.
The company said its Asia Pacific business would assist all divisions in meeting their medium-term targets, and plans to deliver to clients an ever-more integrated firm in the future.
UBS suffered more than any other European bank in the United States subprime crisis and has been embroiled in a US tax dispute. The Swiss government had to rescue the bank earlier this year.
"The transformation we are undertaking is a fundamental one and it will not happen quickly. I am determined, however, that we build a firm for sustainable profit and not one to focus only on short-term expectations." Grübel added.
While reporting its results for the third quarter on November 3, the bank posted a net loss, that reflected hefty charges mainly related to its own credit for financial liabilities. The company reported a net loss for the quarter of CHF 544 million, compared to prior year's profit of CHF 420 million. Net loss attributable to UBS shareholders was CHF 564 million or US$ 542 million, compared to a profit of CHF 283 million a year ago. On a per share basis, loss amounted to CHF 0.15 or US$ 0.14, versus profit of CHF 0.09 in the prior-year quarter.
UBS is currently trading at $17.15, down $0.20 or 1.15% on the NYSE.
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