As forecast in our Oct-12 note, UBS Investment Bank has, in 1Q13, had little trouble meeting its cost/income and return on allocated equity (RoAE) targets.
There is no sign that fixed income clients are deserting the bank.
UBS has retained some high margin/RWA-intensive businesses in their ‘Financing Solutions’ and FICC business units. This, in our view, was the correct decision.
We maintain our FY13E forecast of cost/income of 79% and pre-tax RoAE of 18% – both comfortably above the bank’s own target – for Investment Bank.