UBS Q2 profit jumps 63% as wealth management boom continues

UBS

Swiss bank UBS on Tuesday posted a 63% rise in second-quarter net profit, as buoyant markets continued to help the world’s largest wealth manager generate higher earnings from managing money for the rich.

Second-quarter net profit of $2.01 billion, up from $1.23 billion in the same quarter a year ago, far outpaced expectations for $1.34 billion in a poll of 20 analysts compiled by the bank.

UBS is trying to improve its digital services to reach more customers outside its super-rich core client base. It sees potential for a new online platform to pull in $30 billion in the next year after being launched in May 2020, Reuters reported in June.

On Tuesday, UBS posted $25 billion in fresh fee-generating client inflows. Combined with strong markets, that helped push invested assets in its global wealth management business up by 4% sequentially to $3.2 trillion.

Trading amongst its wealthy and ultra-wealthy clients also remained strong, helping Switzerland’s biggest bank boost pre-tax profits by 47% in its flagship business, as higher lending also helped offset a drag from lower interest rates on its net interest income.

The first of the major European banks to report earnings, UBS has followed U.S. peers in smashing profit estimates. An economic recovery and a jump in dealmaking helped JPMorgan, Goldman Sachs, Citigroup and Bank of America all hoist second-quarter profits.

But trading revenue took a hit, as lenders failed to match prior-year comparables, when unprecedented volatility during the early months of the coronavirus pandemic helped drive record volumes.

UBS, similarly, saw revenue drop 14% in its global markets trading business, though the fall was less pronounced than at some U.S. lenders. It flagged that lower trading volumes could continue into the current quarter.

A surge in revenue from advising on deals helped offset the dip in markets earnings, pushing pretax profit at its investment bank up by 9% overall. Revenue from advising on mergers and acquisitions more than tripled in the second quarter, while in capital markets it was up 35%.

In Switzerland, UBS’ domestic corporate and retail banking business saw pre-tax earnings double, helped by a pickup in economic activity as its home country eased COVID-related restrictions this year.

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