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UBS Q2 Pre-tax Profit Edges Up; Sees Uncertain H2; Stock Down

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Shares of UBS Group AG were losing more than 6 percent in the morning trading in Switzerland as well as in pre-market activity on the NYSE after the Swiss banking giant said Tuesday that it expects uncertain second half.

In the second quarter, the company reported a slight increase in pre-tax profit and nearly flat revenues. All segments except Asset Management reported weak profits.

Ralph Hamers, UBS's Group CEO, said, "The second quarter was one of the most challenging periods for investors in the last 10 years. Inflation continues to be high, the war in Ukraine is ongoing, as are strict Covid policies in parts of Asia. ..Our underlying performance reflected a good result in an environment with lower asset levels, higher volatility and increasing rates. This shows the strength of our strategy and globally diversified business model. ...Heading into the second half of the year, we are well positioned to support clients in an operating environment that remains uncertain."

Further, the company said it expects to repurchase a total of around $5 billion of shares during 2022, as planned.

For the second quarter, profit before tax edged up 1 percent from last year to $2.62 billion, with a 1 percent drop in operating expenses.

Net profit attributable to shareholders was $2.11 billion, up 5 percent from last year's $2.01 billion. Earnings per share grew to $0.61 from $0.55 a year ago.

In the Global Wealth Management segment, profit before tax fell 11 percent $1.2 billion, with a 2 percent drop in total revenues. Net interest income, however, increased 24 percent, mainly reflecting higher deposit revenues, and increased deposit volumes.

Personal & Corporate Banking's profit before tax dropped 13 percent, despite 2 percent rise in revenues.

Asset Management's profit before tax surged 276 percent, including a gain from the sale of shareholding in the Mitsubishi Corp.-UBS Realty Inc. joint venture.

Investment Bank profit before tax fell 39 percent with a 14 percent drop in revenues, despite higher Global Markets revenues.

Total revenues for the quarter were $8.92 billion, nearly flat with $8.90 billion in the prior year. Net interest income grew 2 percent from last year, while net fee and commission income declined 14 percent.

The cost/income ratio was 70.6 percent, an improvement of 1.2 percentage points from last year.

In Switzerland, UBS shares were trading at 15.08 francs, down 6.65 percent.

In pre-market activity on the NYSE, the shares were trading at $15.70, down 6.44 percent.

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