UBS Has Higher Enterprise Combine Than Morgan Stanley, JPMorgan Says

(Bloomberg) — UBS Group AG’s extra diversified wealth administration publicity and enterprise combine makes it extra engaging than US peer Morgan Stanley, in line with analysts at JPMorgan Chase & Co. 

Whereas each companies are forecast to generate about 60% of earnings from asset-gathering companies in 2027, JPMorgan analyst Kian Abouhossein mentioned the Swiss financial institution has a greater wealth administration franchise than Morgan Stanley outdoors of the US. It’s helped by being extremely geared to Asia, which is seen because the “candy spot.” 

Associated: UBS to Transfer Bankers, Merchants to Credit score Suisse’s New York Places of work

As well as, UBS has a home Swiss Financial institution which is successfully a money cow and an funding financial institution consuming not more than 25% of group risk-weighted belongings, versus 50% at Morgan Stanley.

“UBS in our view has a greater enterprise combine than Morgan Stanley,” Abouhossein mentioned in a notice on Friday. 

Associated: Morgan Stanley Affords Pre-IPO Share Buying and selling to Wealth Purchasers

The Swiss financial institution is already the undisputed prime wealth supervisor in lots of elements of the world, however not within the US, the biggest marketplace for wealth administration providers. Chief Govt Officer Sergio Ermotti has signaled that the US shall be a significant plank of its progress technique. 

The financial institution is vying for primacy in international wealth administration, searching for to increase its valuation to a par with US rivals. UBS Chairman Colm Kelleher – who previously served as president of Morgan Stanley – has mentioned that he thinks UBS must be valued as extremely as a few of its US friends.  

Credit score Suisse 

UBS has been making fast progress on integrating Credit score Suisse because it agreed to purchase the smaller rival in an emergency takeover a yr in the past. However nonetheless the acquisition comes with a raft of potential difficulties from closing out positions to managing authorized liabilities. 

“Going ahead, we don’t anticipate UBS’ valuation low cost versus Morgan Stanley to shut, however imagine it could slender,” the JPMorgan analysts mentioned within the notice. Drivers for this embody the earnings advantages of the Credit score Suisse acquisition and the potential for increased capital returns.

Learn Extra: UBS Indicators Most of Credit score Suisse Funding Financial institution to ShutErmotti Says UBS Catch-Up on US Wealth Market Will Take Time