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UBS turns in another solid performance

UBS is looking at blue skies with its financial figures (N. Lavanchy) N. Lavanchy

Switzerland’s largest bank, UBS, has recorded net profit for the first six months of the year of SFr4.77 billion ($3.8 billion), up slightly from a year ago.

And the group’s outlook for the remainder of the year is upbeat.

The bank’s second-quarter profit of SFr2.15 billion was slightly below market expectations but was five per cent higher than for the comparable period last year.

UBS said in a statement on Tuesday that its results showed continued strength across the firm, led by strong asset-based revenues in the wealth and asset-management business.

It added that new money at SFr30 billion in the second quarter was “again extremely strong”, with a near record SFr19.2 billion contribution from wealth-management clients worldwide.

The bank said a recent pick-up in global financial markets was set to continue “at least in the short term”.

“While the natural seasonality in our industry tends to boost earnings in the first part of the year, we have every reason to believe this will be another year of strong results for UBS and our shareholders,” commented chief financial officer Clive Standish.

Increased inflows

The bank said its second-quarter results were driven by a rise in net fee and commission income to its highest level since 2001 – boosted by inflows of client funds as well as increased mergers and acquisitions activity.

“Our advisory capabilities and the strengths of our wealth and asset management businesses helped us to offset the challenging markets facing our trading desks,” commented the bank’s chief executive Peter Wuffli.

However, the second-quarter results were not as strong as those in the first three months of the year when net profit was SFr2.625 billion.

UBS had already warned that poor market conditions would affect its results in the second quarter. Most investment banks were hurt in April and May by a decline in trading revenues, particularly in fixed income, before markets picked up in June.

The market, though, was positive about the figures.

“This was a solid result but not a screamer,” said one trader, predicting the stock might come under pressure after a more than ten-per-cent increase since May alone.

“At first glance, the results might look a bit disappointing but if you focus on the various businesses, they all continue to perform well, said equity analyst Sigrid Baas at ING.

Last week, rival Credit Suisse said profit in the second-quarter had plunged to SFr919 million after it increased reserves to cover potential litigation in the United States. First-half net profit was SFr2.83 billion.

swissinfo with agencies

UBS first-half net profit, including industrial holdings, was SFr4.77 billion ($3.8 billion)
Second-quarter net profit: SFr2.15 billion (+ 5 per cent over 2Q in 2004)
Net new money in second quarter: SFr30 billion
Wealth management clients contributed SFr19.2 billion of this.

UBS made a net profit of just over SFr8 billion in 2004.

The bank employs 69,200 worldwide, 38.5 per cent are located in Switzerland.

It is the world’s seventh-largest bank by market value. It is Europe’s biggest bank by assets.

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SWI - a branch of Swiss Broadcasting Corporation SRG SSR