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UBS CEO Says First-quarter 'One Of The Worst' In Recent History

UBS Group AG Chief Executive Officer Sergio Ermotti said that the first quarter was 'One of the Worst' in recent history. The company expects tactical cost actions to generate at least $300 million in cost saves incremental to strategic actions, with most benefits coming through in the second half of the year.

"While clearly not in line with our long-term aspirations, I find it to be an acceptable outcome if it is a one-off in one of the worst first quarter environments in recent history," UBS chief executive told a conference in London on Wednesday.

Sergio Ermotti said, "We also saw a risk that market conditions would remain tough going into the first quarter, which turned out to be true...Volatility and volumes are muted and it is clear investors have not yet regained confidence, which took a serious hit in the fourth quarter. Persistent uncertainty, political risks reinforce a "wait and see" approach among our clients."

While this backdrop has had an impact on our revenues, it will be partly offset by lower costs and a limited drag from Corporate Center.

Also, even with the additional provisions the company just took and other potential changes, the company expects capital ratios at the end of the first-quarter to be in line with guidance.

Meanwhile, P&C and Asset Management businesses continue to deliver combined profits of about half a billion per quarter, consistent with expectations, the Ermotti said.

Tougher conditions make people and organizations more focused and determined. In this environment the company is redoubling efforts and executing on both strategic and tactical measures, the Chief Executive Officer said.

The Chief Executive Officer noted that the short-term cost initiatives will support profitability without mortgaging UBS's future. The company has slowed hiring and some IT projects, but we will not halt investments into growth-oriented initiatives to improve short-term P&L.

Overall, the company expects tactical cost actions to generate at least $300 million in cost saves incremental to strategic actions, with most benefits coming through in the second half of the year.

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