Solution
David answered on
Dec 23 2021
Financial Analysis - UBS
Financial Analysis - UBS
pg. 1
Financial analysis – UBS
Financial Analysis - UBS
pg. 2
Company Overview
UBS AG (UBS or “the company”) is one of the largest investment managers in the
world. UBS has strong capabilities in investment banking, securities underwriting, and wealth
management. The company is one of the top five investment banks in Europe. UBS primarily
operates in Europe and North America. It is headquartered in Zurich, Switzerland and
employs approximately 65,000 people. In view of systemic importance, the company
eceived extra-ordinary financial support from the Swiss National Bank (SNB) in 2008, when
global financial system was under severe stress following the sub-prime crisis and the
contagion. However, increasing regulatory pressures could and declining margins in
investment banking business could hurt UBS
The company recorded revenues of CHF27,788 million ($31,486.6 million) during the
financial year ended December 2011 (FY2011), a decrease of 13.1% over FY2010.The
operating profit of the company was CHF5,350 million ($6,062.1 million) in FY2011, a
decrease of 28.2% over FY2010. The net profit was CHF4,159 million ($4,712.6 million) in
FY2011, a decrease of 44.8% over FY2010
UBS owns strong wealth management franchises across Switzerland and other major
wealth management markets. It is among the top three wealth managers in the world with
invested assets of CHF2,167 billion ($2,455.4 billion) at the end of December 2011.The
company asserts that through its network of over 300
anches including around 4,700 client-
facing staff, it reaches approximately 80% of Swiss wealth. UBS believes that it serves every
third household, every third wealthy individual and almost half of all Swiss companies. In the
US, the company is a leading wealth management service provider and is the biggest foreign-
owned wealth manager. Furthermore, it has the largest ultra high net worth business globally
in terms of invested assets. Apart from Switzerland and the US, the company is also a leading
wealth manager in Europe, and the Asia Pacific region and is well positioned in main growth
Financial Analysis - UBS
pg. 3
markets such as the Middle East and Latin America. Strong wealth management franchises
across key markets ensure recu
ing business for the company.
UBS is considered be an institution of high systemic importance to Switzerland. In
view of systemic importance, the company received extra-ordinary financial support from the
Swiss National Bank (SNB) in 2008, when global financial system was under severe stress
following the sub-prime crisis and the contagion. The company is implicitly assumed to enjoy
state support in times of financial distress. Such an implicit government support enables the
company to raise funds at low interest rates compared to its peers which are not supposed to
enefit from state support.
UBS has operations spread across over 50 countries and is present in all major
financial centers worldwide. As a result, the company’s client base and revenue streams are
well diversified. For instance, during 2008–11 contribution from international operations
increased from 41.3% to 58.6%. Similarly, the company’s largest business line accounted for
just 42.2% in 2011, compared to 50.4% revenue in 2009 - this indicates declining dependence
on volatile and regulatory affected wealth management business in the domestic market. The
launch of a new Investment Products & Services (IPS) unit in 2010 helped it diversify its
evenue stream. Diversified global operations reduce volatility in revenue.
Corporate governance
Corporate governance helps in applying different policies, values and ethics in an
organization with which the shareholders as well as stakeholders are able to get the
information of the working of the company adequately.
Corporate governance helps in analysing the structure of the company, considering
the case of UBS, we can state the company follows strict dual board structure, which is
compulsory as per Swiss banking law. The company also defines and segregates the roles and
esponsibilities of the company which is divided between the Board of Directors (BoD) and
Financial Analysis - UBS
pg. 4
the Group Executive Board (GEB) and is clearly defined in the Organization Regulations of
UBS AG. The BoD are the ones who decides on the strategy of the Group upon the
ecommendation of the Group Chief Executive Officer (Group CEO), and supervises and
monitors the business, whereas the GEB, headed by the Group CEO, has executive
management responsibility. (Official website of the company, 2013)
The corporate governance of the organization is based on resolving the conflicts that
are faced by the company. The company needs to be transparent in its approach and the
information of the same should be disclosed to the employees of the organization which will
help in increasing the efficiency of the...