UBS Beats Expectations in Q2, Driven by Investment Bank

In the second quarter, UBS reported a 12 percent rise in pre-tax profits, driven by the Group’s investment bank.

UBS Group AG, the world’s largest wealth manager, has announced its second quarter unaudited financial results today. The Swiss banking giant reported a stronger than expected 12 percent rise in pre-tax profits which was predominantly driven by the Group’s investment bank.

On a group level, Pre-tax profits reached CHF 1.68 billion in the second quarter of 2018. This was much higher than the expected CHF 1.4 billion by analysts. It is also up by 10 percent from the second quarter of 2017, which saw CHF 1.5 billion pre-tax profits.

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UBS Investment Bank

UBS’s investment bank, which provides liquidity in FX, rates, credit, and precious metals, was a stand out for the group. Pre-tax profits again surprised on the upside, coming in at CHF 569 million. This is up 21 percent from the same period last year, which reported a figure of CHF 451 million.

Total operating income for the broker, however, was down from the first quarter, coming in at CHF 2.2 billion. This is a decline of six percent from the second quarter, but up seven percent year-on-year.

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For investor client services, the Foreign Exchange, Rates and Credit segment led the way, coming in at CHF 502 million. This was an increase of 20 percent from the first quarter and up 26 percent from the second quarter of 2017. The fx, rates and credit segment was the only area to see both yearly and quarterly gains in the broker’s investor client services.

Sergio P. Ermotti, CEO of UBS AG
Sergio P. Ermotti
Source: UBS

Commenting on the results, Sergio P. Ermotti, Group Chief Executive Officer said: “I’m pleased with the second quarter, which contributed to a strong first half, with particularly good capital generation. We’ll keep our focus on growth and efficiency, and continue to build on the strengths of our global franchise.”

Warning from UBS

Although the investment bank reported strong growth, the Swiss banking giant warned that ongoing geopolitical tensions and rising protectionism have dampened the confidence of investors and continue to be a threat. However, global economic growth prospects remain positive to markets, the statement said.

In the third quarter, market volatility is likely to remain low overall which usually results in lower investor activity. In addition, UBS AG cautioned that funding costs regarding regulation and liquidity requirements would be higher year-on-year. However, when compared to the second year, the report said it should be stable.

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