63% of net profit to $ 2 billion

UBS beat second-quarter earnings expectations as the wealthy invested money in its flagship wealth management business.

The Swiss banking giant on Tuesday announced net profit attributable to shareholders of $ 2 billion for the second quarter of the year. This marks a 63% increase from the same period last year, and significantly above analysts’ expectations of $ 1.34 billion, according to data from Refinitiv.

In its earnings report, UBS attributed this success to “favorable market conditions and investor sentiment”, as well as “continued momentum in flows and volume growth”.

Other highlights of the quarter:

• Operating profit reached $ 8.98 billion from $ 7.4 billion a year ago.
• Return on tangible equity was 15.4%, compared to 9.7% a year ago.
• The CET 1 ratio, a measure of banks’ solvency, reached 14.5% against 13.3% a year ago.

“Our growth in the second quarter was supported by the relationships we built and strengthened throughout the pandemic and by the trust our customers place in our employees and our business. All business divisions and regions contributed to our results, ”said Ralph, CEO of UBS. Hamers said in a statement.

“The momentum is on our side and our strategic choices and initiatives are paying off. And we look forward to making the most of the future.”

The flagship division of the bank Global Wealth Management was the main contributor to results, generating a 47% increase in quarterly profit before tax to $ 1.3 billion. Recurring net commission income grew 30%, largely driven by $ 25 billion in new net commission-generating assets.

This, along with favorable market conditions, helped increase invested assets in the global wealth management industry by 4% to $ 3.2 trillion.

In a recorded message released alongside the earnings report, Hamers pointed out that credit card transactions in Switzerland had almost returned to pre-Covid levels, while investors around the world were increasingly optimistic about it. short-term savings.

“If I had to characterize the last quarter with one word, it would be this: momentum,” said Hamers.

Switzerland’s largest lender has also emerged from the shadows of the collapse of US hedge fund Archegos Capital. The scandal caused a $ 774 million impact on first quarter earnings and stunned investors.

Although not mentioned in the second quarter report, the bank previously said it had dropped all exposure to Archegos and any second quarter loss would be “intangible”.