UBS beats Q2 profit expectations

<p>The Swiss bank saw profits rise more than 50 per cent in the second quarter.</p>

Net profits for Swiss Bank UBS rose more than 50 per cent in the second quarter, beating expectations but not impressing investors, who hoped to see results similar to what rival Credit Suisse reported last week.

UBS shares fell around one per cent on Monday morning (July 27th) despite its quarterly net profits reaching 1.2 billion francs (£810 million). Analysts had expected profits to reach just 996 million francs and the company earned 792 million francs in the same period last year.

Last week, Credit Suisse reported a surge of almost eight per cent after it announced profits of 1.05 billion francs compared to the expected 650 million francs.

"Mixed bag"

Analyst Omar Fall explained that USB's results were a "mixed bag" in terms of quality. "The issue is the 'whisper number' [informal expectations of results] would have increased following Credit Suisse's blowout results and US banks reporting," he added.

Other measures also indicated that USB is remaining strong, despite comparisons to its rival. For example, its common equity tier one ratio was 14.4 per cent at the end of June, compared to an expected 13.9 per cent.

Chief executive at UBS, Sergio Ermotti, commented that the bank's dividend policy remains unchanged and he told reporters that the bank was conserving capital in order to deal with future regulatory requirements, as well as changes in capital needs at certain points of the business cycle.

"We are not obsessed with going out and grabbing assets just for the sake of increasing our asset base," he explained. "We were doing exactly the opposite, we are focusing on the quality of assets".

UBS also reported that investment banking revenues were the highest since the bank implemented a strategy in 2012 to reshape the unit and focus the group around wealth management.

Equities was the strongest performer and saw revenues go up 30 per cent compared to the same period last year. Fixed income, rates and currency saw revenue increase four per cent for the year. However, client activity was lower in credit.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.