NEW YORK ( Trefis) -- UBS ( UBS) is a financial services firm that offers a strong combination of wealth management, asset management and investment banking services on a global and regional basis.
Its trading division accounts for about 40% of the $19.30 Trefis price estimate for UBS's stock, which is about 8% ahead of the current market price. UBS competes Morgan Stanley ( MS), JP Morgan ( JPM), Credit Suisse ( CS), and Goldman Sachs ( GS) in trading, investment banking and asset management services. We have a $19.80 price estimate for UBS, which is about 8% ahead of the current market price.
Trading Assets Increasing
The relative increase of bonds, currencies and commodities (BCC) trading assets in the third quarter of fiscal 2010 from 2009 can potentially provide some insight on the outlook for these banks in terms of their sales and trading activities. The trading assets for these businesses increase has varied from as high as nearly 20% by UBS and 17% by Deutsche Bank to only 3% by Citigroup. Goldman Sachs and Morgan Stanley and Credit Suisse have been on the conservative side with their BCC trading assets increase from 2009 being 8% and 12% and 11% respectively. We consider the trading assets for banks as the fair value of their financial instruments, which they use for trading purposes. It reflects the proprietary capital they can leverage for generating returns. For most of the investment banks we cover we have separated their sales and trading division into bonds, currencies and commodities trading and equities trading. Then we calculated their relative contribution to each of the banks' stock price and discovered that the trading division is one of the largest drivers to value for these banks when compared to other segments like M&A, equity underwriting and debt origination.