UBS Group Q2 Profit Down

(RTTNews) - UBS Group AG (UBS) reported a profit for the second-quarter that declined about 14 percent from the prior year. UBS noted that it is well positioned to benefit from even a moderate improvement in conditions and remains committed to executing its strategy with discipline to mitigate certain effects.

Net profit attributable to shareholders for the second-quarter declined about 14 percent to 1.034 billion Swiss francs from last year's 1.209 billion francs, with earnings per share decreasing to 0.27 francs from 0.32 francs in the prior year.

"We achieved this strong result by helping our clients navigate continued difficult market conditions, while staying disciplined on risk and further reducing cost. UBS remains in a solid position with strong capital, strategic clarity and a well-diversified business model," said Sergio P. Ermotti,Group Chief Executive Officer.

Adjusted profit before tax was 1.672 billion francs, up slightly on the second quarter 2015 when market conditions were more favorable, particularly in Asia.

Net interest income for the quarter dropped 22 percent to 1.164 billion francs from 1.490 billion francs last year. Net fee and commission income for the quarter was 4.087 billion francs, down 7 percent from 4.409 billion francs in the previous year.

As of 30 June 2016, the Group achieved its previously announced target of 1.4 billion francs of net cost savings, a 200 million francs improvement in the quarter, making progress toward the 2.1 billion francs 2017 year-end target, while continuing to absorb substantially higher regulatory costs. UBS said it is taking responsible measures to save costs across the firm in light of the current challenging environment.

UBS said it maintained its strong capital position, with a fully applied CET1 capital ratio of 14.2% and a fully applied CET1 leverage ratio of 3.4%. Risk-weighted assets (RWA) were stable from the prior quarter at 214 billion francs, despite ongoing regulatory inflation.The fully applied leverage ratio denominator (LRD) decreased slightly to 898 billion francs.

UBS noted that sustained market volatility, underlying macroeconomic uncertainty and heightened geopolitical tensions, exacerbated by the impact of the UK referendum vote to end EU membership, continued to contribute to client risk aversion and generally low transaction volumes. These conditions are unlikely to change in the foreseeable future. Furthermore, lower than anticipated and negative interest rates and the relative strength of the Swiss franc, particularly against the euro, still present considerable headwinds.

In addition, the changes to the Swiss bank capital standards and proposed further changes to the international regulatory framework for banks will result in increasing capital requirements and costs. UBS noted that it is well positioned to benefit from even a moderate improvement in conditions and remains committed to executing its strategy with discipline to mitigate these effects.

Wealth Management delivered an adjusted profit before tax of 606 million francs, down 163 million francs from the second quarter of 2015, a resilient performance despite much more subdued client activity.

Wealth Management Americas recorded an adjusted profit before tax of US$281 million compared with US$231 million in the second quarter of 2015, reflecting record net interest income and lower operating expenses.

Asset Management delivered an adjusted profit before tax of 148 million francs, a 10% increase from 134 million francs in the same quarter last year, mainly due to higher performance fees in Global Real Estate.