UBS has reported its fourth quarter results. They are here and if you're an investment banker, they look good: UBS dramatically increased profits in its investment bank in 2013 versus 2012 and has become the first bank to increase pay year-on-year. The details are as follows:
OK, it's not a big increase, but pay is up from an average of CHF334k to an average of CHF343k in the investment bank. At Goldman Sachs and JPMorgan (corporate and investment bank), pay per head fell 4% and 5% respectively. Per-head figures were not available at Deutsche Bank, but the German bank cut its overall investment banking pay bill by 14% last year.
UBS increased its 2013 bonus pool to CHF3.2bn, up from CHF2.5bn in 2012. The cash portion of that bonus pool has gone up from CHF1.4bn to CHF1.7bn.
Whilst pay per head in UBS's investment bank rose 3% in 2013, pay per head in its wealth management business rose 16% year-on-year. Wealth managers at UBS are still paid less than investment bankers, at CHF205k per head. [Addendum: UBS would like to point out that pay in Switzerland has been artificially inflated by changes to its Swiss pension plan.]
UBS is continuing with its 10,000 job cuts. In 2013, 1,980 investment banking staff were eliminated. Front office bankers weren't spared: 42% of the laid off staff were front office people, in correspondence with their proportion of UBS investment banking employees,
UBS boasts that front office productivity in its investment bank has risen 38% year-on-year. Pay doesn't seem to have kept pace.
Revenues in UBS's equities sales and trading business rose an impressive 60% last year to CHF4bn. Equities revenues were 47% of the total in the investment bank. By comparison, the M&A business which is the speciality of UBS investment banking CEO Andrea Orcel accounted for only 6% of the total. The shrunken fixed income sales and trading business accounted for 18% of revenues.
Like JPMorgan, UBS cut risk-taking last year. Average Value at Risk (VaR) fell 37% in 2013 compared to 2012 and the bank points out that it had no loss-making days at all in the fourth quarter.
In 2012, pre-tax profits in UBS's investment bank were CHF267m. Last year they were CHF2.3bn. In 2012, UBS was hit by a $1.5bn LIBOR fine. Still, the increase looks impressive. Be warned: other banks may yet be inspired to cut their fixed income businesses too.