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UBS profit falls short as slumping markets hit clients

UBS underperformed analyst forecasts in the second quarter, as the world’s biggest wealth manager suffered from clients pulling out of the market during a period of high volatility.

Pre-tax profit at the Swiss group’s private bank fell 11 percent in the quarter compared to the same period last year, while earnings at its investment bank were down 39 percent as trading revenue fell by more than half, UBS said on Tuesday.

Overall, the group’s pre-tax profit edged up 1 percent from a year earlier to $2.1bn, as the bank benefited from an $848mn gain from the sale of an asset management joint venture with Mitsubishi. However, analysts had predicted UBS would make a profit of $2.4bn in the quarter.

“The second quarter was one of the most challenging periods for investors in the last 10 years,” said UBS chief executive Ralph Hamers. “Inflation continues to be high, the war in Ukraine is ongoing, as are strict Covid policies in parts of Asia.

He added: “Institutional clients remained active on the back of high volatility. We supported them with advice and execution while handling very high volumes. At the same time, private clients stayed on the sidelines.”

The lackluster performance was a reversal from the beginning of the year, when UBS reported its best first quarter performance since 2007 as the bank’s traders benefited from volatile markets and offset a weaker showing from its wealth managers.

The second-quarter results from UBS came a day after the Swiss wealth manager Julius Baer reported a 26 percent fall in net income for the first half of the year as nervous customers deleveraged their portfolios and retreated from falling stock markets.

Credit Suisse, Switzerland’s second-biggest bank, reports earnings on Wednesday, having already warned of losses for the second quarter.

UBS shares are down 18 percent since hitting a seven-year high in early February.

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