UBS profit rises 53% on lower costs, jump in share trading

A pedestrian and a tram pass the UBS Group AG's headquarters in Zurich, Switzerland.
A pedestrian and a tram pass the UBS Group AG's headquarters in Zurich, Switzerland.PHOTO: BLOOMBERG

ZURICH (BLOOMBERG) - UBS Group reported 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 the highest in three years.

Net income climbed to 1.21 billion Swiss francs (S$1.73 billion) from 792 million francs a year earlier, Switzerland's largest bank said Monday in a statement. That exceeded the 915 million-franc average of three analyst estimates compiled by Bloomberg.

UBS, 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.

"As in previous years, seasonal impacts are likely to affect revenues and profits in the third quarter," the company said Monday.

The bank released earnings a day earlier than planned "in order to be transparent and counter certain incorrect and misleading information that has become public," the bank said Monday. SonntagsZeitung on Sunday reported profit figures citing people close to the bank it didn't identify.

UBS 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 euros (S$453 million) for helping Germans evade taxes.

The wealth management unit beat the 712-million franc average estimate of six analysts compiled by Bloomberg News, posting a pretax profit of 756 million francs, compared with 355 million francs last year.

Net new money at the division was 1.8 billion francs, after 14.4 billion in the first quarter. UBS had said inflows could be affected by changes in the bank's prices, which led to outflows of 6.6 billion francs, UBS said today.

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

The retail and corporate division posted pretax 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 last year.

The investment bank's pretax profit of 551 million francs beat the estimate of 489 million francs. Revenue from equities trading increased to 1.13 billion francs from 869 million francs, the highest since 2012.

"We maintained our momentum despite ongoing market challenges," chief executive officer Sergio Ermotti said in the statement.

The bank will establish a group service company subsidiary in the third quarter, UBS said.