Lots of stats and figures dominate this week’s roundup of major structured product news.
Let’s start the Brief with an exclusive people move.
UBS has promoted its Apac head of derivatives and solutions to co-lead the global markets division for the region. Effective this month, Thomas de Garidel, managing director, has become the co-head of global markets, Asia Pacific at UBS, along with Tim Wannenmacher who specialises in prime services, a spokesperson at the bank told SRP.
The duo succeeds Taichi Takahashi, who has been elevated to head of investment bank, Apac. They all continue to be based in Hong Kong SAR.
It was the group’s ‘seventh consecutive quarter of growth, and the best nine-month results in over a decade’
In Europe, Unicredit has reported strong institutional demand in its seventh consecutive quarter of growth. It posted revenues of €4.5 billion in the third quarter of 2022, up 4.5% compared to the prior year period.
Results were boosted by net interest income growth thanks to the interest rate environment and trading income reflecting favourable commercial activity.
Trading income reached €518m in Q3 2022, up 60% year-on-year (YoY), driven by strong corporate demand for hedging products, especially in Germany, and bond revaluation. Fees were €1.6 bn, down 1.8% YoY due to investment fees, mainly on assets under management (AuM) in Italy, partially offset by higher certificates activities and by transactional services in Italy and Germany.
It was the group’s ‘seventh consecutive quarter of growth, and the best nine-month results in over a decade’, according to its chief executive officer Andrea Orcel.
In the US, for the second consecutive quarter, bank sales have propelled fixed-rate deferred (FRD) and fixed-indexed annuity (FIA) sales to reach record levels in the US. FRD sales in banks jumped 243% and bank FIA sales leapt 61% in the third quarter - this represents the highest quarterly annuity sales results ever. Overall annuity sales were US$80.7 billion in the third quarter, a 29% increase year-on-year (YoY), according to Limra’s US Individual Annuity Sales Survey.
A Europe heavy hitting market, Germany has seen an increase in demand for capital-protected and yield enhancement products in 9M 2022. The German non-flow market, which has collected some US$12.4 billion year to date from over 15,350 structured products, has remained flat during the first nine months of 2022 – up just 1.6% by sales volume compared to the previous year period (9M 2021: 14,736 products/US$12.2 billion).
Most of the sales volume on capital-protected structures is linked to the Eurostoxx 50 with 52 products worth an estimated US$193.5m, and the MSCI World Climate Change ESG Select 4.5% Decrement EUR Index with 22 products worth an estimated US$86.6m.
In the US, Exxon Mobil has had the highest growth of any qualifying underlying over the past 12 months of 77.19%. Its performance over the past two years to date is an extremely strong 212.3%. The structured product performance statistics also show high returns for both live and matured products linked to this underlying of 32.19% and 15.54% respectively.
The vast majority (93.18%) of products linked to Exxon Mobil Corporation are income autocall structures which pay a defined return over the product life. When the underlying performance is good, the products will call and mature early, paying the fixed return.
The most commonly used underlying of the top five performers is the Energy Select Sector SPDR Fund. The income autocall product is again the most popular type although the leveraged return is by far the best performing in terms of returns. This is to be expected since in a bull or growth scenario investors will gain from payoffs that have higher exposure to the underlying rather than defined return or income products.