Swiss banking giant UBS said Tuesday it took in $28 billion of net new money for its wealth management business in the first quarter, with $7 billion of that coming in the days after the announcement of its government-backed takeover of ailing rival Credit Suisse. The Zurich-based bank, which is set to become Switzerland's banking titan after the merger closes in coming months, said underlying pre-tax profit dropped 22 percent to $2.35 billion in the quarter compared to a year ago, while underlying revenues fell 8 percent. UBS said it had bought back $1.3 billion worth of its shares during the quarter, and reiterated that the share-buyback program has been temporarily suspended ahead of the closing of the 3 billion Swiss franc ($3.4 billion) takeover of Credit Suisse announced on March 19. Also Read: Credit Suisse, UBS shares plunge after takeover announcement “In the first quarter, we maintained positive momentum across the firm and attracted $28 billion of net new money in GWM (Global Wealth Management), of which $7 billion came in the last 10 days of March, after the announcement of our acquisition of Credit Suisse,” UBS said in a statement. The bank said it “captured demand” for higher yield into money market and U.S.-government securities at a time of rising interest rates that can increase the return on lower-risk assets like U.S. government bonds. “We delivered these results during a quarter characterized by persistent concerns about interest rates and economic growth exacerbated by questions about the stability of the banking system, especially in the U.S.,” UBS said. “Against this backdrop, private and institutional investors’ activity remained muted.” Also Read: UBS to buy Credit Suisse for nearly $3.25B to calm turmoil The net inflows at UBS came in marked contrast to the 61 billion Swiss francs (nearly $69 billion) in outflows that Credit Suisse reported Monday for the first three months of the year, adding that clients are still withdrawing assets. The forced marriage of Switzerland's two biggest banks — arranged by the Swiss executive branch, central bank and financial markets regulator — was designed in part to help stabilize the global financial system that had been roiled by the collapse of two U.S. banks. The reputation of 167-year-old Credit Suisse had been pummeled in recent years over stock price declines, a string of scandals and the flight of customers worried about the bank’s future.

Citing faster-than-expected recovery, rising consumer confidence and the resultant spending spike, Swiss brokerage UBS Securities has revised upwards its growth forecast for the current fiscal to 9.5 per cent from 8.9 per cent in September, reported the Economic Times.  The brokerage also sees the economy clipping at 7.7 per cent in FY23 but moderating to 6 per cent in FY24, as it expects the benefit of the low-interest rate regime to end by the end of FY23, and it sees the central bank hiking policy rates by 50 bps in the second half of the next fiscal. The Reserve Bank also forecasts 9.5 per cent GDP growth this fiscal while the average projection ranges from 8.5 to 10 per cent. The government projection is around 10 per cent.  The GDP grew 20.1 per cent in the June quarter of FY22. In its September review, UBS said on a seasonally adjusted sequential basis, the real GDP declined by 12.4 per cent in the June quarter against the -26 per cent in the same period last year.  Therefore, we maintain the base case estimate of GDP growth at 8.9 per cent in FY22 compared to the consensus of 9.2 per cent against the deeper 7.3 per cent contraction in FY21, UBS Securities said. The economy is bouncing back on progressive reopening, and the recovery from the second wave has been more pronounced than what we anticipated, Tanvee Gupta Jain, the chief economist at UBS Securities India said on Wednesday. Therefore pencilled in a higher-than-expected GDP run this fiscal. Without giving an exact number, she said the economy will grow by 9-10 per cent in Q3 and 6-6.5 per cent in Q4 this fiscal, leading to higher overall full-year growth. Gupta-Jain told reporters in a concall that she sees real GDP clipping at 9.5 per cent this fiscal, up from 8.9 per cent forecast earlier, 7.7 per cent in FY23 -- which is more optimistic than the consensus 7.4 per cent for the year, but the growth momentum will moderate to 6 per cent in FY24 as the output gap will remain negative amidst the global growth engine slowing down. Their optimism comes from their internal UBS India Activity Indicator data, which suggest economic activity has improved sequentially by an average of 16.8 per cent in the September quarter after contracting 11 per cent in the June quarter. Even for October, the indicator was up 3.1 per cent month-on-month on the festive demand bounce. The brokerage bases the more-than-consensus growth optimism on the following: though consumption growth may moderate measures to boost public Capex and early signs of a recovery in the residential real estate sector may offset some of the adverse impacts.   Similarly, exports could also moderate next year from the very high rates this year due to a shift from goods to service consumption at the global level as the pandemic recedes. They also see a potential credit accelerator effect in the country aiding the recovery. The baseline assumption is that activity continues to normalise, and remaining mobility restrictions are gradually removed. Downside risks to the outlook include the following: a mutant virus that is resistant to vaccines is the biggest downside risk, as it may leave the government no choice but to begin new mobility restrictions, another could be a more than the expected spike in inflation and the resultant hike in repo rates to the tune of 75 bps next fiscal. If both materialise, then FY23 growth will be much lower at 5 per cent, she said.  And the upsides would be a successful and timely implementation of the recently announced structural reforms boosting growth beyond our baseline forecast, which will also lead to the economy closing the output gap faster. According to the brokerage, potential growth has slowed to 5.75-6.25 per cent currently compared to over 7 per cent in 2017, due to longer-than-expected disruption caused by the pandemic and balance sheet concerns faced by economic agents. Beyond FY22, Gupta-Jain believes Capex, especially infrastructure spending, manufacturing and exports will be the next key growth drivers. On inflation, she expects CPI to decelerate to 4.8 per cent in FY23 from 5.4 per cent in FY22, assuming the RBI gradually starts unwinding its ultra-easy policy as the economic recovery gains momentum. In a base case scenario, she expects a policy rate hike of 50 bps in H2 FY23. On the fiscal front, she expects the government to remain committed to fiscal consolidation and narrow the deficit to 8.8 per cent in FY23 from 10.1 per cent in FY22.