UBS smashes expectations as net profit rises by 53 per cent

James Nickerson
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UBS has a stronger measure of balance street strength than many of its competitors (Source: Getty)

UBS has beaten all expectations as its profits rose by more than 50 per cent in the second quarter of the year.

The figures

In an update posted this morning, UBS said net profit was up 53 per cent to SFr1.2bn (£810m) in the three months to June.

Switzerland’s largest lender also reported earnings per share of SFr0.32.

The bank also increased its common equity tier one ratio – a measure of the strength of its balance sheet – to 14.4 per cent at the end of June, ahead of many rivals.

Meanwhile, staff costs increased six per cent.

Why it’s interesting

Wealth management, UBS’s most important unit, reported its highest second quarter pre-tax profits since 2009, at SFr756m, versus the SFr709m that analysts expected and the SFr355m reported a year earlier.

UBS had singled out wealth management as a key area for growth in 2012 post-financial crisis plan, with less focus on investment banking.

The growth in profit before tax of SFr1,635m came during continued market and economic uncertainty, with the company saying the figures demonstrated "fundamental earnings power and the strength of its business model".

Last week the bank’s main rival in Switzerland, Credit Suisse, announced a second quarter net profit of SFr1.1bn, also beating expectations.

However, the bank added that “seasonal impacts” could affect revenues and profits in the third quarter of 2015.

Overall, it said, the second quarter "demonstrated the resilience and diversification of earnings, the strength of its business model, and the benefits of a strategy defined early and executed with discipline".

Discipline like changing your shoes once a day, or not wearing more than seven pieces of jewellery, for example...

What UBS said

UBS chief executive Sergio Ermotti said:

I am pleased with the quarter. We maintained our momentum despite ongoing market challenges, and establishing UBS Switzerland AG was another major milestone in enhancing resolvability.

We remain focused on building on our early mover advantage with a clear strategy, while increasing effectiveness and efficiency, and further investing for profitable growth.

In short

UBS has reported a huge increase in net profit, beating expectations despite ongoing economic uncertainty.