The liquidity position of Swiss bank UBS remains strong despite the coronavirus’s economic impact, Kirt Gardner, the bank's CFO, said Wednesday at the virtually held Morgan Stanley European Financials Conference. The bank has seen minimal lending portfolio losses despite the financial chaos, he said. Gardner's remarks were reported by Reuters.
"We have a conservative risk profile, a high-quality credit portfolio and relatively limited exposure to highly impacted industries, like oil and gas, or air transportation," Gardner said on the conference telecast. "While we have seen a significant increase in margin calls, we’ve experienced very few losses to date across our Lombard portfolio."
- Leaders of Europe’s biggest banks have cautioned that the coronavirus will hit "already under-pressure earnings as a lockdown across many parts of continental Europe slows economic activity, eats into fee income and puts corporate borrowers at risk."
UBS, the largest bank in Switzerland, has yet to see any substantial service disruptions as a result of the pandemic, though Gardner admitted it has the potential to be "transformative" over time.
"The full implications of [the pandemic] for our industry and the global economy are very hard to assess, but they will be profound," he said. But Gardner said he remains confident UBS is strong and resilient, with well-diversified sources of revenues and prudent risk management.
The bank, the world’s largest wealth manager, is primed to meet its strategic year-end goals, Gardner said, but added that the pandemic may change things, should it reach a certain point.
By year's end, UBS hopes to reorganize its wealth management and investment bank capabilities, both of which saw profits reduced by half in 2019. But despite the crisis, Gardner said the two flagship businesses had a resilient start to 2020.
"The bank remains committed to maintaining flat costs for the year with a planned $1 billion in cost savings, and expects to make about $1 billion of investments which it had built into its plans," Gardner said, according to Reuters.
"I would expect, by the end of the week or over the weekend, we’ll see some specific actions that will be announced by the monetary authorities, by the Swiss National Bank in Switzerland, that will provide some aid and some support [to UBS and its peers] that we welcome," Gardner said.