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(Bloomberg) -- UBS Group AG is getting a boost from rising U.S. interest rates and a surge in client activity.
The bank beat analyst estimates for second quarter profit with both wealth management units delivering higher results. Net income rose 13.5 percent to 1.2 billion francs ($1.2 billion) from a year earlier. Analysts were expecting 800 million francs, the average of four estimates compiled by Bloomberg.
UBS is seeing clients become more active as central banks gear up for rate rises after years of cuts to stimulate economic growth. Uncertainty about the direction of monetary policy and concern about the effect on markets had restrained clients.
Wealth management contributed 582 million francs in pretax profit, up from 518 million a year earlier when economic and political uncertainties dulled appetite for risk and lowered transaction volumes. That compares with company-compiled analyst estimates of 591 million francs.
“Improved investor sentiment and enhanced confidence have translated in wealth management client activity," bank said. "However the persistence of low volume levels and seasonality factors may continue to affect overall client activity."
Net new money in wealth management came in at 13.7 billion francs, despite outflows related to the introduction of euro deposit charges and cross-border outflows. In the wealth management Americas business, UBS had outflows of $6.4 billion, also due to "lower recruiting in the quarter," the bank said in a statement Friday.
The U.S. private wealth business got another boost from the Fed in the second quarter and client activity picked up as wealthy individuals returned from the sidelines. Pretax profit from the U.S. brokerage rose 25 percent to 297 million francs from a year earlier, helping the bank overcome a decline in income from its Swiss business.
Investment banking delivered 451 million francs in pretax profit, up from 284 million francs a year earlier. The results in the investment bank were driven by "strong equity capital markets and higher advisory revenues, as well as in equities" partly offset by revenues from foreign exchange rates.
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