Sergio, thank you very much for your time. A beat, of course, when it comes to profits in terms of revenue and the global markets team performing very well, the best quarter on record for them. If we were looking for soft spots, maybe in terms of the estimates, a bit of a mess when it comes to asset management and wealth, but the flows are still there. Earnings per share is a beat as well to those trends, particularly when it comes to the volatility that you've seen and the upside gains for the global markets team in the first quarter. Do you expect those trends to continue in the quarters ahead?
Well, first of all, I have to say that I'm particularly happy to see our results because they underline the real value of our global labor supply franchise. And also when you look at wealth management, Asset Management and Investment Bank both delivered a double digit pre-tax profit expansion. Our core business is at a combined 50% expansion. So I think that's of course we saw a little bit of seasonality, positive seasonality, particularly in the first few weeks of January. I think it's fair to say that afterwards the seasonality factors wear out and the high level of uncertainty and volatility did come in. But, you know, the most important issue is that if you go back in history, you can see how we can really perform in a variety of market conditions.
Wealth management, clearly the biggest profit driver as it has been for a long time. For UBS, how are your clients within wealth adjusting to the market turmoil or political uncertainty? Are they staying on the sidelines? Are they looking for different products, different asset classes?
Well, you look at. So far, we haven't really seen a major shift in asset allocation by clients. And when you look at the first quarter and the first couple of weeks in April, you know, they took more advantage of market volatility to reposition their exposures within the already set asset allocation. When you look at the last couple of weeks, it's fair to say that probably there is a little bit of fatigue coming in from news, coming from the trade tariffs situation. But for the time being, I have to say that despite a rather significant spike in volatility and huge volumes, we saw peaks in volume that exceeded the 30% of the COVID times in the first week of the first couple of weeks of the second quarter. So despite all of this, clients are quite calm and focus on managing within their asset allocation.
Is that volatility peak behind us now, do you think?
I don't think so. I think that's as I say, probably now there is a little bit of settling down. I think markets have found probably a new dimension in terms of where to reconsider things from. And now it's going to be depending on the developments on the tariff front. I think that uncertainty is there. It's very positive to see that there are ongoing discussions in terms of finding agreements. Having said that, if this goes on for too long, uncertainty has also a cost and therefore probably investors and corporates will slow down their investment plans.
How are your private banking clients being impacted by tariffs? Not for the clients themselves directly in their allocation, just as a function of markets movements?
You know, of course we have a lot of clients who are also entrepreneurs or business owners and there it depends very much where they are. So I think the tariff issue won't be a game in which everybody loses or everybody gains. Some people will be winners, some people will be losers.
And is UBS benefiting from that safe haven status that Switzerland has as investors diversify out of the U.S.?
I think the reason is not necessarily a geographic or booking centre issue, that we are not seeing that kind of developments. I think that's well, it's fair to say that we are a global franchise. We have very important activities in booking centers in the US, but also when you look at Europe and Switzerland, you look at Asia, Hong Kong, Singapore, Australia, Japan. So our investors have been playing the diversification cards for many, many years. And so it's nothing really new.
Expanding wealth management in the US is a key priority for you in the team. There's still a bit of catch up with the likes of Morgan Stanley. What's holding the business back there and what does it look like by the end of 2025?
Well, we have a plan on how to bring our pre-tax profit margins in the US to mid-teens numbers. This is we always say our goal in the US is still narrow the gap to our peers because of who we are and the size of our operation and the scope of our operation in the US. It's not realistic to think that we're going to close the gap with our main competitors. But you know, within that we believe that, you know, the ongoing efforts to work across many dimensions to improve profitability are going well. You look at the first quarter results we have, we had a 12%. PBT margins is still short of the 15% we want to achieve in the next couple of years. But it shows that we are moving in the right direction. Okay.
And you're confident getting to that 15% within that time frame in the U.S.?
