Switzerland’s two largest banks, UBS and Credit Suisse, have both reported drops in net profit for the second quarter. However, both banks have reasons to be relatively happy.
On Friday, UBSexternal link reported a 14% drop in net profit, citing “pronounced low client activity” amid economic and geopolitical uncertainties and other market weaknesses. Nevertheless, the profit of CHF1.03 billion ($1.05 billion) was better than expected, topping average analysts’ estimates - as polled by Reuters - of CHF495 million.
The bank said market volatility, macroeconomic uncertainty and “heightened geopolitical tensions” made worse by Britain’s vote on June 23 to leave the European Union dampened clients’ appetite for risk and lowered transaction volumes. It said such conditions were unlikely to change in the foreseeable future.
The UBS results came a day after rival Credit Suisseexternal link unexpectedly returned to profit, with all operating units contributing to its first positive result since CEO Tidjane Thiam set out to reinvent the bank.
Second-quarter net income fell 84% to CHF170 million, compared with CHF1.05 billion a year earlier. Analysts were expecting a loss of CHF178 million, according to the average of five estimates compiled by Bloomberg.