UBS beats expectations with $2.4 billion second-quarter profit
By Ariane Luthi
ZURICH (Reuters) -UBS's second-quarter profit more than doubled from a year earlier, beating expectations on a surge in trading activity even as regulatory uncertainty continued to preoccupy the bank.
Net profit came in at $2.4 billion, beating a company-provided estimate of $2.045 billion as the bank joined rivals in benefiting from higher trading amid market turmoil.
Switzerland's largest bank remains committed to remunerating its shareholders, CEO Sergio Ermotti said, renewing his criticism of Swiss government proposals to increase the amount of capital it would have to hold by $24 billion, which analysts have said could hamper its ability to reward investors.
Reuters reported on Tuesday that UBS had stepped up contingency planning, including considering moving its headquarters. Ermotti said however the bank was focused on staying in Switzerland.
At the same time, "shrinking is not an option", he told reporters, adding that UBS retained its global ambitions, including in the U.S.
"We are not going to front-run any new capital regime, that's clear," he added.
Theories that UBS could easily absorb or mitigate proposed capital increases did not reflect reality, he said on an analysts' call, with any mitigation strategies coming "at a significant cost".
Deliberations in the Swiss parliament over capital requirements could take years.
The government is concerned about the potential for crises, given that UBS is the country's sole global bank, with a balance sheet about double the size of the economy.
For Deutsche Bank analysts, "while Swiss regulation remains a known headwind by now", the results were a "good reminder of the strength of the business model and the fast and relatively smooth integration of Credit Suisse".
TRADING, OUTLOOK STRENGTHEN
Shares in UBS trimmed early gains to trade 0.8% higher.
UBS was upbeat about its outlook, saying it saw a high level of readiness among investors and companies to deploy capital as "conviction" around the global economy strengthens.
Revenues for global markets surged 25%, beating analysts' expectations, during a quarter when trading cues were focused on U.S. tariff policies. Transaction-based income for its global wealth management division rose 12%, slightly below forecasts.
UBS expects trading and transactional activity to normalise in the quarter ahead, but said it was too early to say when deals in the pipeline would be executed.
Other major banks such as Bank of America, JPMorgan Chase, Citigroup and Morgan Stanley also beat estimates in the second quarter as traders cashed in on volatile markets.
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