On Tuesday, UBS missed expectations for the second quarter of 2022 as its wealth management and investment banking divisions saw declining client activity on the back of the global market slowdown.
The Swiss bank posted net profit attributable to shareholders of $2.108 billion, below analysts’ expectations for the company of $2.403 billion.
That marks a 5% increase from the $2 billion reported in the same period last year, when the flagship wealth management business saw a significant windfall from high-net-worth investors, and follows a strong first quarter that led to a net profit of $2.1[ads1]36 billion. .
“The second quarter was one of the most challenging periods for investors in the last 10 years. Inflation continues to be high, the war in Ukraine is ongoing, and so are strict Covid policies in parts of Asia,” UBS CEO Ralph Hamers said in a statement. “In these uncertain times, our clients rely on our powerful ecosystem to navigate markets and invest for the long term.”
Other highlights for the quarter:
- Total revenue reached $8.917 billion, compared to $8.897 billion for the same period last year.
- The return on tangible equity was 16.4%, compared to 15.4% a year ago.
- CET 1 capital adequacy, a measure of banks’ solvency, reached 14.2% against 14.5% in the second quarter of 2021.
Income from investment banking is falling
Investment banking revenue came in at $2.094 billion, down 14% from the same period last year.
In its report, the bank highlighted a drop of $1.121 billion in net fee and commission income, mainly reflecting a “decrease in underwriting fees, particularly in equity capital markets, and a decrease in net brokerage fees due to lower levels of client activity in the Global Wealth Management and Investment Bank .”
“Mutual fund fees decreased, reflecting negative market performance and lower performance fees, and revenues from M&A transactions also decreased,” the report added.
The logo of the Swiss banking giant UBS.
Fabrice Coffrini | AFP | Getty Images
As market declines accelerated across equities and bonds in the second quarter, the bank’s wealth management division saw muted net new fee-generating assets of around $400 million globally, although inflows were $3 billion net positive in the Asia-Pacific.
The asset management business also saw $12 billion in outflows, mostly from equities.
“Institutional clients remained active against a backdrop of high volatility. We supported them with advice and execution while dealing with very high volumes,” CEO Hamers said in a statement.
“At the same time, retail customers stayed on the sidelines. We continued to support them with deposit and loan offerings, both of which saw particularly robust year-on-year growth in the Americas.”