UBS shareholders look to profit hike, dividend

CEO Sergio Ermotti said in UBS' statement: "We maintained our momentum despite ongoing market challenges."
CEO Sergio Ermotti said in UBS' statement: "We maintained our momentum despite ongoing market challenges." PHOTO: EUROPEAN PRESSPHOTO AGENCY

ZURICH • UBS Group reported a second-quarter profit that beat analyst estimates as income from managing funds for the wealthy more than doubled on lower costs, and equity trading rose to its highest in three years.

Chief executive Sergio Ermotti said he is confident that UBS, Switzerland's largest bank, will pay at least 50 per cent of profit to shareholders for a second year.

The bank also plans to distribute a special dividend of 25 Swiss centimes a share, he said in a Bloomberg TV interview .

Net income climbed to 1.21 billion Swiss francs (S$1.7 billion) from 792 million francs a year earlier, UBS said yesterday in a statement.

The world's biggest manager of money for the wealthy has focused on expanding that division while shrinking its investment bank.

It runs the largest private bank in Asia, where firms are competing fiercely to oversee the region's growing wealth, and said funds grew across the business in the period even as the bank changed pricing on some accounts.

UBS' profit was "driven by net positive one-off items", Mr Kinner Lakhani and Mr Nicholas Herman, analysts at Citigroup, said in a note.

The bank said it released earnings a day earlier than planned "to be transparent and (to) counter certain incorrect and misleading information that has become public".

Its profit in the second quarter of last year was hurt by 254 million francs in provisions for litigation, including part of a fine of about €300 million (S$451 million), for helping Germans evade taxes. Net new money at the division was 1.8 billion francs, after 14.4 billion in the first quarter. It had said inflows could be affected by changes in the bank's prices, which led to outflows of 6.6 billion francs, it said yesterday.

Wealth management Americas' profit before tax was down 9.5 per cent to 191 million francs, missing an estimate of 243 million francs.

The retail and corporate division posted pre-tax profit of 397 million francs, narrowly beating the estimate of 386 million francs. Global asset management missed estimates, with profit before tax of 130 million francs, after 105 million francs last year. Equity trading revenue rose to the highest in three years.

Mr Ermotti had in 2012, introduced a policy of paying out at least 50 per cent of net profit if UBS exceeds a capital ratio of 13 per cent, under full application of Basel III standards. "We maintained our momentum despite ongoing market challenges."

UBS will establish a group service company subsidiary in the third quarter. REUTERS, BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on July 28, 2015, with the headline 'UBS shareholders look to profit hike, dividend'. Print Edition | Subscribe