The Swiss multinational investment bank and financial services company UBS reported a 63 per cent surge in its net profits for the second quarter as it comfortably beat analysts’ expectations with buoyant markets continued to aid the company to generate higher earnings from managing money for the super wealthy, said the largest wealth manager of the world.
The company reported a net profit of $2.01 which was much higher than the expectations of analysts of $1.34 billion, driven by a jump in fee income and rise in asset prices at its private bank and asset management business.
“The momentum is on our side. We have no intention of letting go,” Chief Executive Ralph Hamers told analysts on a call. He added that its highest profit levels in more than five years were recorded by the bank across each region it operates in.
“You can expect us to continue to focus on growth on the wealth side, but on efficiency as well (as we) continue to invest,” Hamers said.
UBS shares traded 4.6% higher shortly after market open, while the benchmark Swiss market index was up 1.0%.
Stronger-than-expected revenue across the board and “well-contained costs at the bank were pointed out by analysts and as was indicated by Jefferies in a note.
In order for the bank to win more business from the lower echelons of the well-offs of the world, Hamers, who has been heading the company since November last year, has been focusing on utilizing digital technologies.
According to recent reports, UBS expects to be able to attract wealth of $30 billion in the next year through a new online platform which was launched in May 2020. During the second quarter, there were continued inflows over the platform and the bank managed to attract a further $0.5 billion since early June which tool the value of its invested assets up to $4.2 billion.
Driven particularly by strong growth in the United States where the bank reported witnessing $30 billion in the next year, $25 billion in fresh fee-generating client inflows throughout wealth management was posted by UBS on Tuesday. And in combination with strong markets, that helped the bank to push invested assets within its global wealth management business up by 4 per cent sequentially to $3.2 trillion.
There was also strength in trading amongst its wealthy and ultra-wealthy clients that helped the largest bank of Switzerland report a 47 per cent rise in pre-tax profits in its flagship business, aided by higher lending which also helped the bank to offset a slowdown because of lower interest rates on its net interest income.
UBS’ second quarter performance comfortably beat estimates in line with its peers of the United States. An increase in second quarter profits, driven by a surge in deal making and an economic recovery, was reported by American banks including JPMorgan, Goldman Sachs, Citigroup and Bank of America.
“We expect our revenues in the third quarter of 2021 to be influenced by seasonal factors, such as lower client activity levels compared with the second quarter of 2021,” UBS’ outlook statement said.
(Adapted from Nasdaq.com)