ZURICH: UBS’s second-quarter profit more than doubled from a year earlier, comfortably ahead of expectations, as it joined other major banks in making the most of a surge in trading activity amid market turmoil.
Switzerland’s largest bank also said on Wednesday that it sees a high level of readiness among investors and companies to deploy capital as “conviction” around the macro outlook strengthens.
But it was too early to say when deals in the pipeline would be executed, it added.
Net profit attributable to shareholders came in at $2.4 billion, beating a company-provided consensus estimate of $2.045 billion.
UBS shares slide 7%, reversing gains after Swiss capital proposals
In its investment banking division, revenues for global markets surged 25% during a quarter when trading cues were focused on ructions caused by U.S. President Donald Trump’s tariff war.
At the same time, transaction-based income for its global wealth management division rose 12%.
Some of the earnings beat can be attributed to a $427 million net release of provisions and contingent liabilities related to the resolution of a Credit Suisse litigation issue, as well as a net income tax benefit of $209 million.
UBS said it expects trading and transactional activity to become more normalised in the quarter ahead.
Net interest income in global wealth management and the Swiss business would likely be broadly stable in Swiss francs, while there would be a low single-digit percentage increase in U.S. dollar terms.
Integration of its one-time rival Credit Suisse remained on track, UBS said in its second-quarter statement, with one-third of client accounts booked in Switzerland migrated. Cumulative cost reductions reached $9.1 billion, or 70% of expected gross cost savings, it added.
UBS was delivering on its capital return plans for 2025 and continued accruing for double-digit growth in its dividend, the bank said.
It was reporting earnings for the first time since the Swiss government proposed in June stricter rules for the country’s remaining big bank.
UBS has said it strongly disagrees with what it calls an “extreme increase” in proposed capital requirements to cover risks in its foreign operations and which could mean it would need to hold around $24 billion in additional CET1 capital.
UBS was further enhancing global capabilities while “actively engaging” in the debate on future regulation in Switzerland, CEO Sergio Ermotti said.
Other major banks such as Bank of America, JPMorgan Chase, Citigroup and Morgan Stanley also beat estimates in the second quarter as traders cashed in on volatile markets.
Though HSBC, also reporting on Wednesday, posted a 26% slide in first-half pretax profit, missing analyst estimates, as impairments from its investment in Bank of Communications and exposure to Hong Kong real estate weighed.
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