According to www.writepass.com
following is a SWOT analysis and 5 Forces of Porter analysis that was conducted
for UBS AG.
UBS is the
second largest financial institution in Europe and the largest private wealth
asset manager in the world. They operate in 50 countries all around the world.
Geographically diversified operations
Strong market position.
Strong Capital Adequacy Ratio
Decrease in net income interest
Waning profits and returns
Poor performance in Switzerland
Lucrative asset management industry
Growing investment banking industry
1) Consolidation of the
financial services industry
2) Changes in regulations
Table 1 – SWOT Analysis
1) As mentioned above UBS is operating
in fifty countries which makes them very diversified geographically. Over 40%
of the group’s annual revenues are come from those branches which is a good
indicator of their global diversification.
2) As mentioned before UBS is
the world’s largest wealth manager and also the second largest bank within
Europe. In addition they are the leading retail and commercial bank in the
whole of Switzerland. These among many other market factors enable UBS to gain
competitive advantages over their competitors in various markets.
3) The bank has a CET1 capital adequacy ratio of more than 11% as compared to that observed by
their competitors. In addition, this ratio is higher than the global average
that was set at 8%. This shows the bank’s ability to meet their goals whenever
a crisis occurs.
1) The net income interest of
the group has been decreasing for the past few years. This shows that there is
a declination in the profitability of the group’s assets, which earn interest.
In addition, this also indicates that some operations are curbed by
2) Since 2006 UBS has also
noticed a significant decline in their net profits. This is due to the fall in
the interest margins and reduced revenues. The returns on average assets have
also declined below the industry’s average, which currently is at 1.21%.
3) UBS has also noticed and
recorded poor performances the past few years in Switzerland which is their
home country and that could have worse effects in the future.
1) In 2010, the asset
management industry manage to grow by 7.8% globally which is equivalent to 52,
706 billion dollars. This figure is expected to continue rising. By investing
in this sector, UBS will be able to expand its profitability and operations.
2) The investment banking
industry has also been on an upward trend for the past decade. Considering that
UBS AG has a division of investment banking that contributes over 43% of its
total revenue just to this segment, it is likely to enjoy some significant
benefits if they handle this opportunity right.
1) The past few years many financial
institutions especially smaller ones tend to consolidate and merge and this can
slowly lead in the formation of very strong competitors.