Wealth Management Boosts UBS Profits

UBS reported an increase in second-quarter earnings, as a relaxation of restrictions linked to the pandemic in the spring helped boost the business of its wealth management division.

Net profit for the three months to the end of June climbed to $ 2 billion, up 63% from a year ago, and well in excess of the $ 1.35 billion forecast by analysts.

“The momentum is on our side and our strategic choices and initiatives are bearing fruit,” CEO Ralph Hamers said in a statement on Tuesday.

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

Since its takeover in November, Hamers has seen UBS profit from the bank’s focus on its wealth management business. Assets invested on behalf of clients by the bank through its global wealth management and asset management divisions increased 4% in the quarter to $ 4.4 billion.

UBS’s flagship global wealth management division generated pre-tax profits of $ 1.3 billion, up 47% year-on-year as high net worth clients shifted their investments to more complex and margin products higher.

In investment banking, profits rose 9% to $ 668 million, as higher M&A advisory fees more than offset lower revenues in global markets and prime brokerage.

Profits from personal and business banking services doubled to $ 456 million a year ago. The bank said the resurgence in consumer spending as pandemic-related restrictions were lifted was responsible for increased credit card and currency revenues.

Despite the collapse in income from UBS’s hedge fund operations, where performance fees fell 46% in the quarter, the asset management division posted profits of $ 255 million, up 62%, thanks to higher valuations and performance fees for its global equity products.

The bank also strengthened its balance sheet during the pandemic. Its Tier 1 core capital ratio – a key measure of financial strength – rose to 14.5%, ahead of the bank’s target of 13%.

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