Rising US rates, client activity give UBS a boost

ZURICH • The world's largest wealth manager UBS is getting a boost from rising US interest rates and a surge in client activity.

The bank beat analyst estimates for second-quarter profit, boosted by an uptick in wealth management activity. Net income rose 13.5 per cent to 1.2 billion Swiss francs (S$1.7 billion) from a year earlier, topping the 800 million francs expected by analysts in a Bloomberg poll.

UBS is seeing clients becoming more active as central banks gear up for rate rises after years of cuts to stimulate economic growth. Uncertainty about the direction of monetary policy and concern about the effect on markets had restrained clients.

Wealth management contributed 582 million francs in pre-tax profit, up from 518 million francs a year earlier.

"Improved investor sentiment and enhanced confidence have translated into wealth management client activity," the bank said. "However, the persistence of low volume levels and seasonality factors may continue to affect overall client activity."

The US private wealth business got another boost from the Fed as wealthy individuals returned from the sidelines. Pre-tax profit from the US brokerage rose 25 per cent to 297 million francs from a year earlier, helping the bank offset a decline in income from its Swiss business.

Investment banking delivered 451 million francs in pre-tax profit, up from 284 million francs a year earlier. This was driven by strong equity capital markets and higher advisory revenues, partly offset by revenues from foreign exchange rates.

BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on July 29, 2017, with the headline 'Rising US rates, client activity give UBS a boost'. Print Edition | Subscribe