EUROPE - ABN Amro and UBS did nothing to buck the recent trend in slumping full year profits.
Swiss giant UBS reported a net profit for 2001 of CHF4,973 - a 36% drop on the corresponding figure, 2000. But Q4 was more optimistic at CHF1,106m - 22% higher than in Q3 2001, despite being down 24% on the same period in 2000.
The firm cited private equity investment losses and the costs of funding the PaineWebber acquisition as contributory factors in the drop in profits.
UBS Asset Management posted gross profit of CHF67m in Q4, up from CHF 55m in Q3. But full year profits before tax were CHF 231m, down 28% from 2000. Operating income was up 8% at CHF 2,110m. Increased income resulting from a new investment fund pricing structure, the acquisition of Brinson Canada and the inclusion of Brinson Advisors was offset by higher spending on growth initiatives, added the firm.
Total invested assets in Q4 rose 8% to CHF672bn, up 5% for the full year. Net new money was CHF9.2bn for the quarter and CHF 34.9bn for the year.
Dutch firm ABN Amro registered a 29% drop in net profits - reporting EUR3,230m for 2001. Fourth quarter figures were also down by 8%.
ABN’s private clients and asset management unit (PCAM) was hit by an increase of 14.5% in operating expenses - largely attributable to costs around the inclusion of Alleghany Asset Management in February 2001 - compared to the preceding year, as well as suffering from weak market conditions.
Revenues in 2001 were down 2.2% compared to the revenue level of 2000.
In 2001, assets under management did see an increase of 34% to EUR172 bn, compared to EUR128 bn at the end of 2000, but this was largely as a result of the Alleghany acquisition. Excluding this acquisition, the figure was EUR130bn at the end of 2001.
Asset management revenues - on the back of higher net commission income and trading results - did show an 8% improvement in the fourth quarter on the preceding quarter explained by a shift in portfolio mixes towards equities.
But expenses did increase 12.3% quarter on quarter, mainly driven by seasonal fluctuations and increased client activity.
Institutional assets by mandates saw an increase of 1% in favour of funds at the cost of institutional clients - the full composition by mandates at the end of the quarter was 51% institutional clients, 10% private clients and 39% funds.
Both firms remained cautious in their outlook for 2002, expecting markets to remain difficult as volatility continues to affect investor confidence as well as levels of corporate activity. ABN added that it expected its operating expenses to decline sufficiently to offset the impact of the sizeable reinstated pension fund costs in The Netherlands and the slightly higher level of provisioning.
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