UBS profit jumps 63% in Q2 as wealth management boom continues

ZURICH: Swiss bank UBS on Tuesday posted a 63% rise in second-quarter net profit, as buoyant markets continued to help the world's largest wealth manager generate higher earnings from managing money for the rich.

Second-quarter net profit of $2.01 billion, up from $1.23 billion in the same quarter a year ago, far outpaced expectations for $1.34 billion in a poll of 20 analysts compiled by the bank.

"Our growth in the second quarter was underpinned by the relationships we have built and strengthened throughout the pandemic," Chief Executive Ralph Hamers said in a statement, adding all business divisions and regions had contributed to the rise.

"Momentum is on our side and our strategic choices and initiatives are paying off."

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Hamers, in the top role since November, has set his sights on digitalisation to help win more business from the lower echelons of the world's well-off.

UBS is trying to improve its digital services to reach more customers outside its super-rich core client base. It sees potential for a new online platform to pull in $30 billion in the next year after being launched in May 2020, Reuters reported in June.

On Tuesday, UBS posted $25 billion in fresh fee-generating client inflows. Combined with strong markets, that helped push invested assets in its global wealth management business up by 4% sequentially to $3.2 trillion.

Trading amongst its wealthy and ultra-wealthy clients also remained strong, helping Switzerland's biggest bank boost pre-tax profits by 47% in its flagship business, as higher lending also helped offset a drag from lower interest rates on its net interest income.

MARKET VOLUMES DOWN

The first of the major European banks to report earnings, UBS has followed US peers in smashing profit estimates. An economic recovery and a jump in dealmaking helped JPMorgan , Goldman Sachs, Citigroup and Bank of America all hoist second-quarter profits.

But trading revenue took a hit, as lenders failed to match prior-year comparables, when unprecedented volatility during the early months of the coronavirus pandemic helped drive record volumes.

UBS, similarly, saw revenue drop 14% in its global markets trading business, though the fall was less pronounced than at some US lenders. It flagged that lower trading volumes could continue into the current quarter.

"We expect our revenues in the third quarter of 2021 to be influenced by seasonal factors, such as lower client activity levels compared with the second quarter of 2021," its outlook statement said.

A surge in revenue from advising on deals helped offset the dip in markets earnings, pushing pretax profit at its investment bank up by 9% overall. Revenue from advising on mergers and acquisitions more than tripled in the second quarter, while in capital markets it was up 35%.

In Switzerland, UBS' domestic corporate and retail banking business saw pre-tax earnings double, helped by a pickup in economic activity as its home country eased COVID-related restrictions this year.