UBS profit jumps 63% in second quarter as wealth management boom continues


The logo of Swiss bank UBS can be seen in a branch in Zurich, Switzerland on June 22, 2020. REUTERS / Arnd Wiegmann

  • Second quarter net profit of $ 2.006 billion, beats analyst estimate of $ 1.343 billion
  • $ 25 billion influx of new customers generating fees in the second quarter
  • Focus on digitization to help win more business

ZURICH, July 20 (Reuters) – Swiss bank UBS (UBSG.S) posted a 63% increase in second quarter net profit on Tuesday as dynamic markets continue to help the world’s largest wealth manager generate higher income through money management for the rich.

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

“Our growth in the second quarter was supported by the relationships we established and strengthened throughout the pandemic,” Managing Director Ralph Hamers said in a statement, adding that all business divisions and regions contributed to the increase .

“The momentum is on our side and our strategic choices and initiatives are bearing fruit.”

Hamers, at the top of the rankings since November, has set his sights on digitization to help win more business from the lower echelons of the world’s wealthy.

UBS is trying to improve its digital services to reach more clients outside of its very rich client base. He sees the potential for a new online platform to generate $ 30 billion next year after launching in May 2020, Reuters reported in June. Read more

UBS saw a $ 25 billion influx of commission-generating new clients on Tuesday. Combined with strong markets, this helped push the assets invested in its global wealth management business up 4% sequentially to $ 3.2 trillion.

Trade between its rich and ultra-rich clients also remained strong, helping Switzerland’s largest bank to increase pre-tax profits by 47% in its flagship business, as the increase in lending also helped offset the impact. the fall in interest rates on its net interest income.

DECLINE IN MARKET VOLUMES

The first of the major European banks to report earnings, UBS followed its US peers in crushing earnings estimates. An economic recovery and an increase in transactions helped JPMorgan (JPM.N), Goldman Sachs (GS.N), Citigroup (CN) and Bank of America (BAC.N) achieve all of their profits in the second quarter. Read more

But trading revenues were hit as lenders failed to match the comparables from the previous year, when unprecedented volatility in the early months of the coronavirus pandemic helped generate record volumes. .

UBS, likewise, saw its revenues fall by 14% in its trading activities in global markets, although the decline was less pronounced than with some US lenders. He signaled that the decline in transaction volumes could continue into the current quarter.

“We expect our revenue in the third quarter of 2021 to be influenced by seasonal factors, such as lower levels of customer activity compared to the second quarter of 2021,” its outlook statement said.

An increase in transaction advisory income helped offset weaker market profits, increasing its investment bank’s pre-tax profit by 9% overall. M&A advisory revenues more than tripled in the second quarter, while in capital markets they increased 35%.

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

Reporting by Brenna Hughes Neghaiwi; Editing by Kenneth Maxwell

Our standards: Thomson Reuters Trust Principles.

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