UBS is making inroads with the lucrative super-wealthy segment, but Switzerland's largest bank still has some open issues at its flagship 2.3 trillion Swiss franc wealth management arm.

If UBS' more than 9 percent hike in net profit to 1.28 billion Swiss francs ($1.29 billion) was the highlight of the bank's second quarter, outflows of 1.2 billion francs in its heavyweight private banking division represented the lowlight.

The outflows at UBS' now merged private bank, compared to buoyant inflows of 19 billion francs in the first three months of this year, were 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.

UBS veteran Tom Naratil and ex-Commerzbank boss Martin Blessing, who now jointly run the private bank after the exit of long-standing head Juerg Zeltner in December, will have envisioned a very different reading for their first full merged quarter.

Super-Rich Inroads

Naratil and Blessing can take comfort from their strategy of targeting the so-called ultra-rich, or those with more than $50 million to bank. The bank earned nearly one-third – 30 percent – more on the year from super-rich clients. Lending also perked up, and invested assets climbed 20 percent. 

The good news? The reading demonstrates that under ultra-rich boss Josef «Joe» Stadler, UBS has successfully positioned itself as the billionaire's bank. The bad? A regional view of UBS' private bank shows sluggish profit growth everywhere but in the U.S., where pre-tax profit surged 16 percent. Asia managed a feeble 4 percent rise while in Switzerland, profits actually edged 3 percent lower.

Less Active Clients

Invested assets also languished in the low double-digits or even slipped into single-digits – the new mega private bank isn't firing on all cylinders just yet. Most of UBS' wealthy clientele are still shy to invest in a big way.

Nothing indicates a sudden burst of energy or activity: UBS expects moderate volatility in this quarter, which the bank said will dampen clients' appetite for trading.