Early to rise

27 Jul 2015 By Dominic Elliott

The Swiss bank snuck out early, estimate-beating earnings of $1.25 bln in the second quarter. Its two main businesses did well, and capital buffers swelled. That, plus a tax asset revaluation, makes UBS one of the few European banks likely to pay a decent full-year dividend.

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UBS on July 27 said second-quarter net profit rose 53 percent to 1.2 billion Swiss francs ($1.25 billion), in an earnings release posted a day earlier than scheduled to counter “incorrect and misleading information” about the results in the Swiss media.

The jump in net profit was far higher than the 3.2 percent rise forecast in a Reuters poll of six analysts.

During the three months to June, UBS’s common equity Tier 1 capital ratio climbed 70 basis points to 14.4 percent, while its common equity Basel III leverage ratio rose 20 basis points to 3.2 percent.

It said a revaluation of its deferred tax assets could add 1.5 billion Swiss francs to its profitability over the next two quarters.

Wealth management, UBS’s largest division, produced pre-tax profit of 769 million Swiss francs – its best second quarter since 2009, the bank said.

In investment banking, UBS produced a return on attributable equity of 30 percent over the quarter. Equities trading revenue was up 30 percent year-on-year, though down 2 percent quarter-on-quarter. Fixed income trading revenue was down 3 percent year-on-year and down 43 percent quarter-on-quarter. Advisory and underwriting revenue fell 16 percent year-on-year, but was up 6 percent quarter-on-quarter.

By 0840 GMT, UBS shares were 1.4 percent lower than July 24’s closing price, at 21.28 Swiss francs.

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The jump in net profit was far higher than the 3.2 percent rise forecast in a Reuters poll of six analysts.

It said a revaluation of its deferred tax assets could add 1.5 billion Swiss francs to its profitability over the next two quarters.

Wealth management, UBS’s largest division, produced pre-tax profit of 769 million Swiss francs – its best second quarter since 2009, the bank said.

By 0840 GMT, UBS shares were 1.4 percent lower than July 24’s closing price, at 21.28 Swiss francs.

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