According to www.writepass.com
following is a SWOT analysis and 5 Forces of Porter analysis that was conducted
for UBS AG.
UBS is a worldwide
financial institution which is the second largest in Europe and the largest
private wealth asset manager in the world. They also have branches 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 within America, Europe and Asia. Over 40% of the group’s
annual revenues are derived from its branches abroad (UBS, 2012). This is
indicative of the group’s global diversification in terms of operations.
2) UBS is the world’s largest
wealth manager and also the second largest bank within Europe. In addition, it
is the leading retail and commercial bank in Switzerland. These among many
other market factors enable UBS to gain a competitive advantage over its competitors
in various markets by leveraging its leading position.
3) The bank has a CET1 capital adequacy ratio of more than 11% as compared to that observed in
their competitors. In addition, this ratio exceeds the global average that was
set at 8%. This is a desirable ratio since it shows the group’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.