The Swiss financial giant UBS Group has registered a profit above expectations in the second quarter and reported that the prospect of a cooling of global trade tensions should support results with the resumption of investor activity.
The bank, based in Zurich, announced this morning that the'Net income was $2,4 billion in the three months ended June. Customer activity at the main division of wealth management reached $23 billion, in line with expectations. “Conversations with our customers and deal pipelines indicate a high level of activity among investors and companies, ready to invest capital, as the macroeconomic outlook strengthens,” the bank said in its forecast.
For months, the international wealth management giant had been sounding the alarm: uncertainty over US President Donald Trump's tariff plans was keeping investors on the sidelines and hindering agreements. But now, the fact that major business partners, including the European Union and Japan, are reaching a agreement with the White House, is dispelling some fears, although we must take into account the unpredictable. "First of all we must reach agreements and then we must see if there is a certain degree of predictability and stability in these agreements“, said the CEO of UBS, Sergio Ermotti, in an interview by Bloomberg Television in Zurich.
Le UBS shares jumped as much as 3,7% after opening in Zurich before retreating, but still maintaining a gain of more than 1% at 30,98 Swiss francs.
Stock trading revenues increase by 20%
UBS's performance in the quarter was boosted by the investment bank's results, in particular by a 20% increase in stock trading revenues, in line with those of US competitors. The result was also driven by technical factors, including a small gain in the unit that liquidates Credit Suisse assets and the release of provisions related to a previous lawsuit.
Lpre-tax profit The wealth management unit's revenue was below estimates, with transaction-based income falling short of expectations.
The stumbling block of the increased capital requirements requested by the Swiss government
UBS is having to face capital requirements higher, up to 26 billion dollars, as part of a reform of the Swiss government which wants to prevent another crisis like the one seen with the collapse of Credit Suisse. UBS's share price has been impacted by this reform and the stock is still lagging behind its international peers, despite a recent recovery.
The bank's top management is evaluating solutions to mitigate the impact, continuing to try to convince the government that the rules should be relaxed. "Deliberately reducing the size of the bank to reduce capital needs is not an option for UBS," Ermotti said. "Having a globally diversified business is a strength for us and for Switzerland." The bank is also considering the possibility of move its headquarters abroad, as reported by Bloomberg.
Earlier this month, UBS launched a buyback of own shares, previously announced, up to $2 billion for the second half of this year, bringing the total for this year to $3 billion.
Capital returns for investors beyond this year are less certain, and the bank said it will publish an update on its annual results in early 2026.
Ermiotti downplays the scandal surrounding client losses on derivatives.
In recent months Ermotti has had to deal with a scandal in Switzerland regarding the huge losses suffered by customers related to complex derivative products, due to currency fluctuations earlier this year.
“The situation does not indicate any governance or adequacy control issues to me,” Ermiotti told Bloomberg TV saying instead that the derivatives losses were “the unfortunate consequence of a improper use by those who use them.” The adverse event occurred when the currencies underlying the derivatives took unexpected turns, causing some clients to suffer losses greater than their initial investments. UBS reviewed the roles of six managers involved in the situation earlier this month, and some of them have already left the bank.
"This is a matter affecting fewer than 200 clients in very specific locations" and "a handful of advisors," Ermotti said. "We had more than 3.000 clients using these products within a very defined asset allocation and risk appetite framework." The products, known as Range Target Profit Forwards, are complex currency derivatives that are difficult for inexperienced investors to understand, according to the Swiss Retail Investors Association (SASV), which says it is in contact with affected clients.
