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UBS earnings 2nd quarter 2019



UBS announced a net profit of $ 1.4 billion for the second quarter of 2019. This compared to a net result of 1.28 billion Swiss francs ($ 1.29 billion) in the second quarter of 2018.

Swiss lender announced This is the highest result in the second quarter since 2010. The increase in profits is in spite of a decline in both the investment banking and asset management divisions.

Here are some key highlights for the quarter:

  • billion against $ 7.6 billion a year ago
  • Return on tangible equity stood at 11.9% versus 12% a year ago [1
    9659005] Common equity ratio 1 of 13.3% versus 13.4% a year ago

"We saw a normalization of the environment that came out of a good March into the rest of the quarter. I would say the highlights were clear: diversification paid off again, "said Sergio Ermotti, CEO of UBS, to CNBC's Joumanna Bercetche.

UBS shares hovered around the flat line shortly after the market opened.

Global Wealth Management down

However, UBS saw a decline in its global asset management business compared to a year ago. The bank reported an operating profit of $ 886 million compared to over $ 1 billion in the second quarter of 2018.

The results of the investment bank division also declined a year ago. It recorded an operating profit of $ 440 million in the second quarter of this year, compared to $ 571 million a year ago.

In a speech to CNBC, Ermotti explained that "the upturn in the US interest rate environment has created pressure."

Market expectations point to a cut in interest rates by the Federal Reserve later this month. The central bank had embarked on a normalization path in 2015, following the global crisis and sovereign debt crises. Recent data, however, has shown worsening economic conditions in the US

In Europe, the outlook is similar for monetary policy. The European Central Bank (ECB) said in May that if incoming economic data does not show any improvement, then the central bank will be willing to announce more stimulus.

Ermotti told CNBC that he is not sure if any further easing will propel the economy. "I'm not sure that going deeper into negative territory or using QE (quantitative relief) is the way to get out of trouble … We need more structural responses," he said.

Ermotti warned "there are serious broader concerns than just the banking industry" from low prices.

Outlook

Ermotti's comments come after the Swiss lender, in its latest results, warned that a return to monetary stimulus from various central banks could hurt profits in the future. "A sharp fall in interest rates and expected interest rate cuts will continue to affect net interest income compared to last year," UBS said.

However, the Swiss bank expects a diversified business, stronger investor sentiment and higher market volatility to help offset the effects of monetary policy changes.

In the previous quarter, UBS had announced another $ 300 million cut from the 2019 cost after anticipating a fall in revenue.

"We are constantly looking in ways from a structural and tactical point of view, and the 300 million were pretty tactical. We are constantly thinking about how to optimize our cost base, but at the same time we invest in the future," Ermotti said Tuesday.


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