By Brenna Hughes Neghaiwi
ZURICH (Reuters) – UBS on Tuesday posted a 63% leap in second-quarter internet revenue, simply beating expectations as buoyant markets continued to assist the world’s largest wealth supervisor generate greater earnings from managing cash for the wealthy. The Swiss financial institution’s internet revenue of $2.01 billion far outpaced expectations for $1.34 billion in a ballot of 20 analysts compiled by the group, as payment earnings jumped and asset costs rose at its non-public financial institution and asset administration enterprise. “Momentum is on our facet and our strategic selections and initiatives are paying off,” mentioned Chief Government Ralph Hamers in an announcement, including all enterprise divisions and areas had contributed to the rise.
UBS shares had been indicated up 3.15% in pre-market buying and selling exercise, whereas the benchmark Swiss market index was indicated up 0.4%. Analysts pointing to stronger-than-expected income throughout the board and “well-contained prices”, as indicated by Jefferies (NYSE:) in a notice.
Hamers, within the high function since November, has set his sights on digitalisation to assist win extra enterprise from the decrease echelons of the world’s well-off. UBS sees potential for a brand new on-line platform to drag in $30 billion within the subsequent yr after being launched in Could 2020, Reuters reported in June.
That platform continued to see inflows via the second quarter, as an additional $0.5 billion since early June introduced its invested belongings as much as $4.2 billion.
On Tuesday, UBS posted $25 billion in recent fee-generating shopper inflows all through wealth administration, thanks specifically to sturdy development in the US, the place it’s seeing rising enterprise with the ultra-rich. Mixed with sturdy markets, that helped push invested belongings in its international wealth administration enterprise up by 4% sequentially to $3.2 trillion.
Buying and selling amongst its rich and ultra-wealthy shoppers additionally remained sturdy, serving to Switzerland’s greatest financial institution increase pre-tax income by 47% in its flagship enterprise, as greater lending additionally helped offset a drag from decrease rates of interest on its internet curiosity earnings.
MARKET VOLUMES DOWN
The primary of the main European banks to report earnings, UBS has adopted U.S. friends in smashing revenue estimates. An financial restoration and a leap in dealmaking helped JPMorgan (NYSE:), Goldman Sachs (NYSE:), Citigroup (NYSE:) and Financial institution of America (NYSE:) all hoist second-quarter income.
However buying and selling income took a success, as lenders did not match prior-year comparables, when unprecedented volatility through the early months of the coronavirus pandemic helped drive report volumes.
UBS, equally, noticed income drop 14% in its international markets buying and selling enterprise, although the autumn was much less pronounced than at some U.S. lenders. It flagged that decrease buying and selling volumes may proceed into the present quarter.
“We count on our revenues within the third quarter of 2021 to be influenced by seasonal elements, corresponding to decrease shopper exercise ranges in contrast with the second quarter of 2021,” its outlook assertion mentioned.
A surge in income from advising on offers helped offset the dip in markets earnings, pushing pretax revenue at its funding financial institution up by 9% general. Income from advising on mergers and acquisitions greater than tripled within the second quarter, whereas in capital markets it was up 35%.
UBS in April reported an surprising $774 million loss from the collapse of U.S. funding fund Archegos, taking the full hit to international banks past $10 billion.
The Archegos default has had a a lot bigger affect on Credit score Suisse (SIX:). UBS’ cross-town rival has been beneath stress to provide you with an overhaul plan since struggling a greater than $5 billion Archegos hit, onerous on the heels of the $10 billion implosion in funds linked to produce chain finance agency Greensill Capital.
Credit score Suisse studies earnings on July 29, following Deutsche Financial institution (DE:) on July 28.
On Tuesday, UBS confirmed an additional $87 million buying and selling loss from the Archegos affair for the second quarter, as beforehand flagged.
In Switzerland, UBS’ home company and retail banking enterprise noticed pre-tax earnings double, helped by a pickup in financial exercise as its dwelling nation eased COVID-related restrictions this yr.
(This story was refiled to appropriate the web revenue determine in second paragraph to $2.01 billion (not $2.91 billion))