Swiss banking giant UBS has reported a 63% rise in second-quarter net profit as markets continued to facilitate the world’s largest wealth manager generate higher earnings from managing the rich’s wealth.
UBS’s second-quarter net profit reached $2.01 bn, up from $1.23 bn in the same quarter last year. The profit exceeded analyst predictions of $1.34 bn.
The Swiss bank is pushing to improve its digital services in a bid to extend its customer reach outside the super-rich, which is currently its primary client base. The bank sees potential for a new online platform that would bring in $30 bn in the next year.
UBS has also reported $25 bn in new client inflows. This, in combination with strong markets, has helped to push invested assets in the bank’s global wealth management business up by an additional 4%, reaching a total of $3.2 tn.
Throughout the pandemic, UBS’s trade with ultra-wealthy clients also remained strong, boosting the Swiss bank’s pre-tax profits by 47% in its flagship business.
Kicking off the European earnings seasons
The first of the major European banks to report earnings, UBS followed its US peers with shattering earnings estimates.
An economic recovery and increased transactions have helped JPMorgan, Goldman Sachs, Citigroup, and Bank of America, all lifting second quarter profits.
But trading revenues were hit as lenders failed to match the comparables of the previous year, when unprecedented volatility over the first months of the coronavirus pandemic helped generate record volumes.
UBS, similarly, saw its revenues fall by 14% in its trading activities in world markets, however, the decline was less pronounced than with some US lenders.
Current quarter to see a decline in transactions
The bank reported that the decline in transaction volumes could continue into the current quarter.
“We expect our revenue in the third quarter of 2021 to be influenced by seasonal factors, such as lower customer activity levels compared to the second quarter of 2021 ” UBS wrote in its outlook statement.
An increase in income from transaction advice helped offset weaker market profits, pushing up his investment bank ‘s pre-tax profit by a total of 9%.
M&A advisory income more than tripled in the second quarter, while in capital markets it increased 35%.
UBS announced in April an unexpected amount of $ 774m losses due to the collapse of the American investment fund Archegos, bringing the total blow to global banks beyond $ 10 bn.