September 13, 2021
UBS International Wealth Administration Co-Head Tom Naratil
– Photographer: Gianluca Colla/Bloomberg by way of Getty Pictures
UBS Wealth Administration USA is open to M&A to realize the dimensions and steeper revenue margins of its larger rivals, however it is usually assured that it could possibly increase profitability with its current gross sales pressure, Tom Naratil, co-president of UBS International Wealth Administration, mentioned on Monday.
“We do take a look at issues which can be inorganic, definitely, and we should always,” Naratil mentioned in response to a query about scale within the U.S. at a digital Barclays Monetary Providers Convention. “On the similar time, we predict the alternatives from an natural foundation are fairly engaging.”
At roughly 6,000 brokers, UBS’s U.S. division is lower than half the scale of its wirehouse rivals, however Naratil, who’s president of UBS Americas and member of the Swiss mother or father’s group government board, cited elevated lending, progress of latest fee-generating property, and advisor productiveness as “levers” that UBS has pulled to assist its pre-tax revenue margins rise from round 12% in 2016 to 19% this 12 months if the primary half efficiency is annualized.
UBS expects to proceed to “drive these key levers,” he mentioned, particularly figuring out its excessive expectations for elevated common productiveness amongst its advisors.
Naratil mentioned UBS might have traditionally missed out on round 500 foundation factors in pre-tax revenue margin due to its smaller measurement, however the productiveness good points it has made just lately have narrowed that hole to about 300, Naratil mentioned.
A lot of its rivals, together with Morgan Stanley, the biggest wirehouse by its roughly 16,000 brokers, report margins within the mid-to-high 20% vary as they’ve equally pursued an identical technique over the previous decade that has targeted on loans and fee-based account progress.
Lending, which is extra worthwhile to the agency as a result of it doesn’t share income from buyer loans with advisors, will proceed to be a progress class for UBS, Naratil burdened, noting that his wirehouse is “in the course of the pack” in relation to mortgage penetration as a ratio of shopper property.
“We nonetheless have extra room to develop and extra alternative for us,” Naratil mentioned. A lot of the progress has been and can proceed to be with customary securities-based loans, he mentioned.