Swiss banking giant UBS.
Fabrice Coffrini | AFP | Getty Images
UBS on Tuesday beat expectations for the second quarter of 2022 as its wealth management and investment banking divisions saw a drop in client activity amid a global market slump.
The Swiss bank reported net profit attributable to shareholders of $2.108 billion, below analysts’ consensus estimates of $2.403 billion.
This marks a 5% rise from the $2 billion reported in the same period last year, when the leading wealth management business saw significant windfalls from wealthy investors, and follows a strong first quarter in which the group posted a net profit of $2.136 billion .
“The second quarter was one of the most challenging periods for investors in the last 10 years. Inflation remains high, the war in Ukraine continues, and strict Covid policies in parts of Asia,” UBS chief executive Ralph Hammers said in a statement. “In these uncertain times, our clients rely on our powerful ecosystem to navigate the markets and invest for the long term.”
Other highlights for the quarter:
- Total revenue reached $8.917 billion compared to $8.897 billion in the same period last year.
- Return on tangible capital amounted to 16.4% compared to 15.4% a year ago.
- The CET 1 capital ratio, a measure of bank solvency, reached 14.2%, up from 14.5% in the second quarter of 2021.
Investment banking revenues are down
Investment banking revenue was $2.094 billion, down 14% from the same period last year.
In its report, the bank highlighted a $1.121 billion decline in net fee and commission income, mainly reflecting “a decrease in underwriting fees, particularly in equity capital markets, and a decrease in net brokerage fees due to lower levels of client activity in Global Wealth Management and the Investment Bank”.
“Investment fund fees declined, reflecting negative market performance and lower performance fees, and M&A revenue also declined,” the report added.
As market declines accelerated in equity and fixed income in the second quarter, the bank’s wealth management arm saw muted net new fee-generating assets of about $400 million globally, although inflows were net positive of $3 billion in Asia – the Pacific region.
The asset management business also saw outflows of $12 billion, mainly from equities.
“Institutional clients remained active amid high volatility. We supported them with advice and execution while dealing with very high volumes,” CEO Hammers said in a statement.
“At the same time, private customers remained on the sidelines. We continued to support them with deposits and loan offerings, both of which saw particularly strong year-over-year growth in the Americas.”
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