Huge drop in Investment Banking revenues but still more than a Billion Dollars in Quarterly Profit
UBS posted a 21% fall in wealth management and 64% drop in investment banking revenues for Q1 2019. "Profit" came in at 1.1bn USD (with PBT coming in at USD 1.5bn).
A Closer Look at UBS' Capital Ratios
13% CET1 capital ratio. How do we interpret this 13% number? Basel III capital rules require all banks to maintain a minimum CET1 to RWA ratio of 4.5% by 2019. CET1 is a capital measure introduced in 2014 to protect the economy from financial crisis - the mandating of a minimum requirement ensures banks have a financial "cushion" to absorb unexpected losses. Thus UBS has almost three times the minimum requirement. CET1 stands for Common Equity Tier 1 which is a component of Tier 1 capital that consists mainly of common stock held by a bank or other financial institution.
A quick recap on the calculation -
CET1 Ratio = Common Equity Tier 1 Ratio = Common Equity Tier 1 Capital / Risk Weighted Assets
CET1 capital is at the bottom of a bank's capital structure implying in the event of a crisis, losses are first deducted from this tier. If the ratio falls below minimum level required by regulators, banks must build back that capital layer or risk being shut down or taken over. Dividend payments and employee bonuses may be restricted during this time.
Leverage -
3.8% CET1 leverage ratio
5.4% Tier 1 leverage ratio
UBS posted a 21% fall in wealth management and 64% drop in investment banking revenues for Q1 2019. "Profit" came in at 1.1bn USD (with PBT coming in at USD 1.5bn).
A Closer Look at UBS' Capital Ratios
13% CET1 capital ratio. How do we interpret this 13% number? Basel III capital rules require all banks to maintain a minimum CET1 to RWA ratio of 4.5% by 2019. CET1 is a capital measure introduced in 2014 to protect the economy from financial crisis - the mandating of a minimum requirement ensures banks have a financial "cushion" to absorb unexpected losses. Thus UBS has almost three times the minimum requirement. CET1 stands for Common Equity Tier 1 which is a component of Tier 1 capital that consists mainly of common stock held by a bank or other financial institution.
A quick recap on the calculation -
CET1 Ratio = Common Equity Tier 1 Ratio = Common Equity Tier 1 Capital / Risk Weighted Assets
CET1 capital is at the bottom of a bank's capital structure implying in the event of a crisis, losses are first deducted from this tier. If the ratio falls below minimum level required by regulators, banks must build back that capital layer or risk being shut down or taken over. Dividend payments and employee bonuses may be restricted during this time.
Leverage -
3.8% CET1 leverage ratio
5.4% Tier 1 leverage ratio
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