UBS misses second-quarter earnings expectations; CEO cites ‘uncertain timing’

UBS Tuesday missed expectations for the second quarter of 2022 as its investment banking and wealth management divisions saw client activity decline as a result of the global market downturn.

The Swiss bank posted a net shareholder profit of $2,108 billion, well below the company’s general analyst expectations of $2.403 billion.

It marks a 5% increase over $2 billion reported in the same period last yearas the leading wealth management business saw a significant return from wealthy investors and followed a strong first quarter that saw Group net profit of $2,136 billion.

“The second quarter has been one of the most challenging periods for investors in the past 10 years. Inflation continues to be high, the war in Ukraine is underway, as well as the strict Covid policies in the countries. Asia,” UBS CEO Ralph Hamers said in a statement. “In these uncertain times, our customers rely on our robust ecosystem to navigate the market and invest for the long term.”

Other highlights for the quarter:

  • Total revenue came in at $8.917 billion, compared with $8.897 billion in the same period last year.
  • Return on tangible equity stood at 16.4%, compared with 15.4% a year ago.
  • The CET 1 capital ratio, a measure of a bank’s solvency, came in at 14.2% compared with 14.5% in the second quarter of 2021.

Investment banking revenue slips

Investment banking revenue came in at $2,094 billion, down 14% year-on-year.

In its report, the bank highlighted a $1.121 billion drop in net fee income and commissions, largely reflecting “a decrease in underwriting fees, particularly in Equity Markets, and a reduction in environmental fees.” net income due to lower levels of client activity in Global Wealth than Board of Directors and Investment Banking.”

Fund fees fell, reflecting negative market activity and lower operating fees, and lower revenue from mergers and acquisitions, the report added.

Logo of the giant Swiss bank UBS.

Fabrice Coffrini | AFP | beautiful pictures

As market declines accelerated across equity and fixed income in the second quarter, the bank’s wealth management division saw net new generating assets of around $400 million globally. muted, despite a net positive inflow of $3 billion in Asia-Pacific.

The asset management business also saw $12 billion outflows, mostly from stocks.

“Institutional clients remain active after high volatility. We have supported them with advice and execution while handling very high volumes,” CEO Hamers said in a statement.

“At the same time, private clients remain on the sidelines. We continue to support them with deposits and loans, both of which have seen particularly strong year-over-year growth in the Americas.”

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