OREANDA-NEWS. UBS delivered a robust second-quarter adjusted1 profit before tax of CHF 1,635 million despite continued market and economic uncertainty, again demonstrating its fundamental earnings power and the strength of its business model. Net profit attributable to UBS Group AG shareholders was CHF 1,209 million, up 53% compared with the second quarter of 2014, with diluted earnings per share of CHF 0.32.

“I am pleased with the quarter. We maintained our momentum despite ongoing market challenges, and establishing UBS Switzerland AG was another major milestone in enhancing resolvability. We remain focused on building on our early mover advantage with a clear strategy, while increasing effectiveness and efficiency, and further investing for profitable growth.”

Sergio P. Ermotti, Group Chief Executive Officer

Business division highlights

  • Wealth Management delivered its best second-quarter result since 2009, with an adjusted1 profit before tax of CHF 769 million and robust net new money of CHF 8.4 billion excluding the effects of its balance sheet and capital optimization program. On a reported basis, net new money was CHF 1.8 billion.
  • Wealth Management Americas posted an adjusted1 profit before tax of USD 231 million, with operating income and financial advisor productivity at record levels.
  • Retail & Corporate had its best second quarter since 2010, with an adjusted1 profit before tax of CHF 414 million showing strong net new business volume growth for retail clients.
  • Global Asset Management reported an adjusted1 profit before tax of CHF 134 million and strong net new money of CHF 8.3 billion, excluding money market flows.
  • The Investment Bank reported an adjusted1profit before tax of CHF 617 million with the best second-quarter result in Equities since 2012. It achieved an adjusted1 return on attributed equity of 33.8% without increasing its risk profile.

Information in this release is presented for UBS Group AG on a consolidated basis unless otherwise specified. Key figures for UBS AG are included at the end of this release. Financial information for UBS AG does not differ materially from UBS Group AG. UBS AG will publish its consolidated quarterly financial statements in electronic form only on 31 July 2015. 

Group, divisional and Corporate Center performance overview

Overall, UBS’s second quarter again demonstrated the resilience and diversification of its earnings, the strength of its business model, and the benefits of a strategy defined early and executed with discipline.

UBS Group reported a net profit attributable to shareholders of CHF 1,209 million, up 53% compared with the second quarter 2014, with diluted earnings per share of CHF 0.32. Group adjusted1 profit before tax was CHF 1,635 million, with positive contributions from all divisions and regions. Adjusted1 annualized return on tangible equity for the first six months of 2015 was 12.0%, above the 2015 target of around 10%.

The bank strengthened its leading capital position, with a fully applied Basel III CET1 capital ratio of 14.4% at the end of June, above the target of at least 13.0% and ahead of all other large global banks. Its fully applied Swiss SRB leverage ratio rose to 4.7% in the second quarter, as the Swiss SRB leverage ratio denominator (LRD, fully applied) decreased by CHF 33 billion partly reflecting a substantial reduction in Non-core and Legacy Portfolio assets. Since the third quarter of 2012, UBS has reduced the Non-core and Legacy Portfolio LRD from CHF 293 billion to CHF 70 billion.

The creation of UBS Group AG and UBS Switzerland AG were major milestones to improve the Group's resolvability, in response to the evolving regulatory environment. In June, some 2.7 million clients and approximately CHF 300 billion in assets, primarily from the Swiss Retail & Corporate and Wealth Management businesses, were transferred into UBS Switzerland AG. UBS is the first bank to complete this step in Switzerland. UBS has also implemented a more self-sufficient business and operating model for UBS Limited in the UK, and has submitted plans for the establishment of an intermediate holding company in the US. In the third quarter, UBS will establish a Group service company as a subsidiary of UBS Group AG, into which shared services and support functions of the Group will be transferred over the next several years. This will help ensure the bank can maintain the operational continuity of these critical services in case of resolution. All these measures will allow UBS to qualify for a rebate on the progressive buffer capital requirement applicable to Swiss systemically relevant banks, which should result in lower overall regulatory capital requirements for the Group.

UBS was honored to receive the Euromoney Award for Excellence for Best Global Wealth Manager and, for the fourth year running, Best Bank in Switzerland. In addition, Euromoney named UBS Investment Bank the Best Flow House in North America and Best Equity House in Western Europe, underlining the success of its client-centric model. UBS Neo, the firm’s cross-asset e-commerce platform, was named Best Platform at the annual Digital FX Awards hosted by Profit & Loss magazine.

Wealth Management delivered its best second-quarter result since 2009 with an adjusted1profit before tax of CHF 769 million. The business continued to generate high-quality earnings, with an increase in recurring income reflecting continued success in its strategic initiatives to grow loans and increase mandate penetration, as well as further pricing measures. Adjusted net new money was robust at CHF 8.4 billion, driven by inflows from all regions and segments, most notably its market-leading Asia Pacific franchise, as well as from Ultra High Net Worth clients. The balance sheet and capital optimization program implemented in the first half of 2015 led to net new money outflows of CHF 6.6 billion during the quarter. On a reported basis, net new money was CHF 1.8 billion.

Wealth Management Americas reported an adjusted1 profit before tax of USD 231 million. Total operating income and recurring net fees increased to record levels, and financial advisor productivity remained industry-leading, while pre-tax profit was affected by higher charges for provisions for litigation, regulatory and similar matters and other provisions. Net new money was slightly negative at USD 0.7 billion, reflecting seasonal outflows of approximately USD 3.9 billion associated with income tax payments.

Retail & Corporate posted its best second-quarter result since 2010, with an adjusted1profit before tax of CHF 414 million. The net new business volume growth for retail clients was particularly strong for a second quarter. Credit loss expenses were lower, while general and administrative expenses increased mainly due to higher charges for provisions in the Corporate & Institutional client business.

Global Asset Management recorded strong net new money of CHF 8.3 billion excluding money market flows, with net inflows from third-party clients more than doubling compared to the prior quarter. Adjusted1 profit before tax was CHF 134 million. The quarter saw an increase in net management fees mainly in traditional investments and global real estate, offset by a decline in performance fees in O’Connor and A&Q, in line with market developments in the alternative asset management sector.

The Investment Bank achieved a solid result with an adjusted1 profit before tax of CHF 617 million, following very strong results in the first quarter. Investor Client Services benefited from the best second-quarter result in Equities since UBS accelerated its strategy in 2012, and a solid performance in FX, rates and credit, despite lower client activity and after exceptionally high FX revenues in the first quarter. Corporate Client Solutions improved on the back of higher revenues mainly in debt and equity capital markets and advisory. The business maintained risk profile and allocated resource limits discipline and its results once again demonstrated the strength of its business model and client-centric approach. Adjusted1 return on attributed equity for the second quarter was 33.8%.

Corporate Center – Services recorded a loss before tax of CHF 253 million. Corporate Center – Group Asset and Liability Management reported a profit before tax of CHF 132 million. Corporate Center – Non-core and Legacy Portfolio recorded a loss before tax of CHF 145 million, achieving further progress in de-risking its balance sheet with RWA and the Swiss SRB leverage ratio denominator decreasing by CHF 4 billion and CHF 14 billion respectively.

UBS aims to create long-term value for its investors and clients, while making a positive contribution to the communities in which it operates. In June, for example, UBS launched a campaign to engage up to 50% of its Americas workforce in volunteering programs. To date, UBS Americas employees contributed around 20,000 hours of their time – approximately 70% of 2014's full-year total – volunteering across the Americas. Combined with the time volunteered by other UBS staff around the world, around 53,000 hours were logged in the first half of 2015 to support volunteering programs and give back to society.