Swiss bank UBS kicked off 2016 with a near two-thirds drop in net profit after a tough quarter for investment banking, plagued by volatile markets, which has also cut into earnings at US rivals.

UBS, Switzerland’s biggest bank and the world’s largest wealth manager, said on Tuesday net profit for the first three months of 2016 tumbled to 707 million Swiss francs . This was roughly in line with the average estimate of 704 million francs in a Reuters poll of five analysts, but 64 per cent lower than the 1.98 billion francs posted in the same quarter last year.

The drop-off follows a similar trend from US banks, which last month reported falling investment banking revenues as tough market conditions kept clients from trading, investing or issuing new securities. “Negative market performance, substantial volatility, as well as underlying macroeconomic and geopolitical uncertainty, led to more pronounced client risk aversion and abnormally low transaction volumes in the first quarter,” UBS said in a statement.

The drop was exacerbated by the year-earlier comparison period being unusually strong - UBS booked its biggest quarterly profit in nearly five years in first-quarter 2015.

But in a silver lining, UBS’s two private banking businesses saw net new client assets of 29 billion francs, the highest such figure for a first quarter since 2008 and well above a poll forecast. The net new money measure is viewed as an important indicator for future revenue in wealth management. A net outflow of client assets at the end of 2015, largely due to withdrawals from Europe and some emerging markets, had raised some concerns for UBS’s flagship wealth management operations.

UBS also said it had made 1.2 billion francs in cost savings by March 2016 since 2013, leaving it was on track to achieve its targeted savings of 2.1 billion francs by the end of 2017. In its results presentation, the bank detailed initiatives to hit its 2017 target. These include aligning its platforms for its wealth management and wealth management Americas businesses.

The bank’s common equity tier 1 capital ratio, which UBS has set as a benchmark for its dividend, was 14 per cent, down from 14.5 per cent at the end of 2015.

UBS aims to return at least half its profits to shareholders if it maintains capital reserves equal to at least 13 per cent of risk-weighted assets under global rules, and 10 percent when applying its own stress tests.

Reuters