Wealth management increases UBS profits

UBS reported second-quarter profit growth, as a easing of pandemic restrictions during the spring helped drive activity in its wealth management division.

Net income for the three months to the end of June climbed to $ 2 billion, up 63 percent from a year ago, and comfortably exceeds analysts ’$ 1.35 billion forecast.

“The timing is on our side and our strategic choices and initiatives pay off,” CEO Ralph Hamers said in a statement Tuesday.

“Our growth in the second quarter has been supported by the relationships we have built and strengthened throughout the pandemic,” he added.

Since taking over in November, Hamers has seen UBS take advantage of the bank’s attention on its asset management business. Assets invested on behalf of customers by the bank through its global wealth management and wealth management divisions increased by 4 per cent during the quarter to $ 4.4 trn.

UBS’s global wealth management division contributed pre-tax profits of $ 1.3 billion, up 47 percent year-on-year, as wealthy customers shifted their investments to more complex products. and of higher margins.

In investment banking, profits increased 9 percent to $ 668 million, with higher M&A consulting fees offsetting declining revenues in global markets and brokerage premiums.

Personal and corporate banking profits have doubled to $ 456 million from a year ago. The bank said rising consumer spending when pandemic-related restrictions were responsible for an increase in income from credit cards and foreign exchange.

Despite the winter collapse in UBS hedge fund activity, where operating expenses fell 46 percent in the quarter, the asset management division reported profits of $ 255 million, in growth of 62 percent, thanks to growing valuations and performance costs in its global capital products.

The bank also bolstered its balance sheet during the pandemic. Its core tier-one capital ratio – a key measure of financial strength – has gone up to 14.5 per cent, ahead of the bank’s 13 per cent target.

Uncertainty remains however in several upcoming lawsuits, the bank said.

UBS has provided $ 2 billion so far to deal with the expected legal costs. The outcome of an appeal against a court decision in France on tax fraud is expected in September, the bank said. A parallel case is also under investigation by the Belgian authorities. And UBS faces cases involving the sale of securities backed by U.S. mortgages and Madoff investment fraud.

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