UBS manages £1bn profit in tough quarter
SWISS bank UBS said it would resolve tax haven disclosures with US authorities by the autumn as it announced consensus-beating second quarter results and slowing outflows yesterday.
The world’s second largest wealth manager is due to honour its agreements with the US Department of Justice and the Securities and Exchange Commission by October. UBS hopes the move, which will see it hand over the details of 4,450 clients, will draw a line under the affair and help stem the gush of customers’ savings from its coffers.
The news came as UBS revealed robust figures despite a difficult three months to June. Net profit came in at SwFr2bn (£1.2bn), down nine per cent quarter-on-quarter but above expectations, driven by a SwFr1.3bn pre-tax gain from investment banking. In a tough trading period for peers such as Credit Suisse, the institution grew its equities revenues by nine per cent to SwFr1.4bn. Fixed income and commodities turnover fell 21.3 per cent but remained decent at SwFr1.7bn.
Oswald Grübel, the turnaround specialist parachuted in as chief executive last year, particularly trumpeted the healing in UBS’ troubled wealth management business. Net outflows slowed to SwFr5.2bn from SwFr8bn in the first quarter. Pre-tax profits slipped marginally to SwFr1.1bn.
Grübel said: “This was a good result in volatile market conditions and demonstrates the progress we are making as we move towards our mid-term targets.”
Matthias Bueeler at Kepler Capital Markets hailed the “strong performance” and said UBS was past the recovery phase.
But Elie Darwish at Exane BNP Paribas said the numbers were flattered by a SwFr595m accounting gain on UBS’ own debt and a SwFr300m gain on the bank’s derivatives portfolio. “The quality of the results wasn’t as good as the company’s consensus beat suggests,” he said.
Another sell-side analyst said UBS had been reluctant to guide up consensus during the quarter, even when brokers cut their expectations amid a raft of disappointing displays from Wall Street’s behemoths.