UBS Posts Forecast-Beating Profit but Warns on Geopolitical Tensions

UBS’s results cap a tough period for the bank.


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Stefan Wermuth/Bloomberg News

UBS

Group AG posted its highest second-quarter net profit in almost a decade, beating analysts’ expectations, helped by the better-than-expected performance of its investment bank unit and gains in its personal-and-corporate-banking business.

The results cap a tough period for the bank and follow a challenging first three months of 2019, which Chief Executive Sergio Ermotti deemed one of the worst first quarters in recent history for wealth-management and investment banking. In June, one of its top economists angered Chinese securities professionals with a reference to Chinese pigs while discussing consumer prices. UBS is also facing the fallout of a fine of more than $4 billion in France for allegedly helping wealthy clients evade taxes.

Net profit for the second quarter rose to $1.39 billion from $1.38 billion a year earlier, the Swiss banking giant said Tuesday, marking its highest net profit for the period since 2010. Analysts had expected UBS to report a net profit of $1.04 billion, according to a consensus forecast provided by the bank.

The results were good, although “driven by more volatile items, namely IB [investment banking] primary revenues and the corporate center,” Citi analysts said.

UBS shares listed in Switzerland were 1.1% higher in morning trade.

Adjusted pretax profit declined 12% on the year at UBS’s key global wealth management unit. Adjusted pretax profit at the investment-bank operation surpassed expectations, despite a 23% fall. It rose 11% at the personal-and-corporate-banking division.

The bank warned that global growth has stabilized at a lower level and that there were lingering risks related to geopolitical tensions.

The low interest-rate environment will continue to have a negative impact on net interest income, UBS added but said its regional and business diversification would help mitigate this.

Looking ahead, “an improvement in investor sentiment and higher market volatility could help to offset the typical third-quarter seasonality,” the bank said.

Write to Pietro Lombardi at Pietro.Lombardi@dowjones.com

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