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Investment Overview for UBS (NYSE:UBS)
UBS is a financial services firm that offers a strong combination of wealth management, asset management and investment banking services on a global and regional basis. It delivers a full range of advisory and financial product related services to its private, corporate and institutional clients.
Wealth Management is the company's most valuable division
The total assets under management(AUM) for the Wealth Management division (Swiss Clients, Americas Clients and International Clients) is currently around 2.5 times that of the Asset Management division. The Equity Underwriting & Debt Origination division has seen pressure on fees between 2005 and 2011 for both the Equity Underwriting and Debt Origination sub-divisions. These factors make Wealth Management more valuable for UBS.
Under Wealth Management, International Clients are more valuable than Swiss Clients
The AUM for International Clients are currently nearly five times that for Swiss Clients.
Increasing demand for banking and wealth management services in emerging markets
With the GDP and per capita income of emerging markets, particularly in Asia-Pacific growing rapidly, there is an increasing demand for capital from companies in these markets to support the growing purchasing power of the people. Also with the integration of these markets with the global economy, there is a shifting trend in these countries from family run businesses to corporations. As a result of these factors, an increasing number of companies in these markets are going public, leading to a growing demand for equity underwriting services. In addition to this, consolidation across different sectors is driving demand for M&A advisory services.
Volcker Rule to affect proprietary trading desks of investment banks
The Volcker Rule restricts banks from making certain kinds of speculative investments if they are not on behalf of their customers. The rule proposed by former Federal Reserve Chairman Paul Volcker was argued on the grounds that such speculative activity played a key role in the financial crisis of 2007–2010. The Volcker Rule is expected to be implemented soon. The proprietary trading desks of UBS account for a significant percentage of its earnings, and could be significantly affected once the Volcker rule comes in effect.
Economic recovery to stimulate the asset management industry:
Due to the global financial crisis, investors around the world having considerable exposure to equity markets have lost significantly. Market appetite to regain prior years’ losses may stimulate investments in multi-asset, alternative and equity products, while signs of a broad based recovery in the real estate market should improve prospects in alternative investments.
Long term trends, including the on-going shift from state pension dependency to private retirement funding, aging populations in mature markets, and growing wealth in emerging economies, will also positively impact revenues and assets under management.
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Trefis has a team of in-house Analysts who gather historical data from company filings and other verifiable sources. When historicals are available, we explain how we got them at the bottom of the Trefis analysis section below.
Who came up with the Trefis forecast for future years?
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How does my dragging the trendline on the chart impact the stock price?
- We use forecasts for business drivers to calculate forecasted Revenues and Profits for each division of the company.
- We then use forecasted Profits in a Discounted Cash Flow (DCF) model to obtain the Price Estimate for the company.
See more on: DCF Methodology
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