UBS' profit rose more than 9 percent in the second quarter, but the Swiss bank suffered outflows at its flagship private banking arm, mainly in the U.S.
The Swiss-based bank said profit for the three months stood at 1.28 billion Swiss francs ($1.29 billion) from 1.17 billion francs year-ago. UBS' kept a lid on spending while revenue, especially at its wealth management and investment banking arms, rose.
The Swiss bank's results exceed analyst estimates, and may give the shares price – a source of irritation for CEO Sergio Ermotti, the architect of UBS' turnaround – a fillip.
Wealth Outflows
UBS suffered outflows of 1.2 billion francs at its now merged private bank, due to U.S. clients pulling funds to pay taxes, and a withdrawal of 4.4 billion francs in the U.S. for an employee stock scheme.
Elsewhere, UBS' private bank, now co-led by veteran American banker Tom Naratil and ex-Commerzbank boss Martin Blessing, demonstrated good health: its long-languishing interest income perked up, lending expanded on a major push in Asia, and the bank now has one-third of its wealthy clients in lucrative mandates.
Politics Dampen
The bank referenced «peak funding» for regulatory initiatives including too-big-to-fail rules in a slide presentation. «We'll keep our focus on growth and efficiency, and continue to build on the strengths of our global franchise», Ermotti said in a statement.
Rising U.S. dollar interest rates will bolster income, even as investors shy away from markets due to political turmoil around the world and protectionism by governments, UBS said. It also highlighted seasonal weakness ahead – when U.S. and European clients typically go on summer holidays – as well as subdued volatility as dampers.
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