Leap in profits at a major bank: UBS benefits from the worries of millionaires

The major Swiss bank UBS had a surprisingly strong second quarter.

Above all, it benefited from the fact that affluent customers shifted their investments because of worries about inflation and that they continued to be very active in the markets.

UBS is the go-to destination for millionaires and billionaires, with $ 3.23 trillion in assets under management.

"Customers want to know how they can protect themselves from inflation and which markets will reopen after the corona pandemic," said bank boss Ralph Hamers in a conference call with journalists on Tuesday.

Above all, the increased income in asset management ensured a jump in profits by almost two thirds to $ 2 billion between April and June, as the bank announced on Tuesday.

Tim Kanning

Editor in business.

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As in the past few weeks with the major American banks, UBS has now clearly exceeded analysts' expectations. Hamers, who moved from ING to Zurich in November, avoided mentioning the name of the recently ailing local rival Credit Suisse, but said: “We are growing faster than our competitors. This is also due to the fact that some competitors did not have such a good quarter. ”In its home market alone, UBS was able to double its pre-tax profit, which was partly due to the fact that it was able to reduce its loan loss provisions due to the waning of the Corona crisis.

Credit Suisse had suffered heavy losses with both the collapse of the financial group Greensill and the bankruptcy of the Archegos hedge fund. UBS was able to more than compensate for its losses from the Archegos commitment of $ 800 million through good business in other areas. Hamers admitted, however, that the bank had to learn a number of lessons from the hedge fund debacle: Above all, they wanted to be more careful not to take on too large individual exposures and that business partners were more transparent about their positions.

At the corporate level, UBS exceeded all of its targets. In terms of return on equity, the bank achieved 19.3 percent, which is significantly more than the targeted 12 to 15 percent. With the 2021 annual financial statements, Hamers now also wants to publish new financial targets. This was well received on the stock market, with UBS shares gaining 4 percent at their peak. Most of all, analysts praised the fact that all four business lines increased their results. The bank was able to earn more money than ever by advising on mergers and acquisitions. However, the clear core business remains advising wealthy private clients, with whom the people of Zurich earned more than with the other three segments combined. As with its American competitors, business with bonds was weaker at UBS. This is a bad omen for Deutsche Bank,which is very strong in this segment and will present its figures on July 28th.