July 25, 2013

UBS Signals Sizable Jump in Net Profits for Q2

Estimated net asset inflows for Wealth Management Americas at $2.9 billion for its 7,000-plus advisors in second quarter of 2013

UBS (UBS) released estimates for its second-quarter results on Monday in an apparent effort to pre-signal the markets about its actual results, which are set to be released July 30.

The global investment bank expects its operating profit before taxes to be up 7% from last year to roughly 1.020 billion Swiss francs (or $1.3 billion) and its net profit attributable to shareholders to jump 62% to about 690 million Swiss francs ($742 million).

Last year, it reported a second-quarter operating profit before taxes of 951 million Swiss francs ($1.02 billion) and a net profit of 425 million Swiss francs ($457 million).  

The bank also says that its Basel III common equity tier 1 ratio should “improve significantly to approximately 11.2% on a fully applied basis and 16.2% on a phase-in basis.”

These preliminary results include pre-tax charges of about 865 million Swiss francs (or $930 million) for litigation, other provisions and an impairment of financial assets; some 700 million Swiss francs ($753 million) is expected to affect the results of the Corporate Center, while roughly CHF 100 million ($108 million) will impact its non-U.S. Wealth Management in relation to the Swiss-U.K. tax agreement.

In addition, UBS plans to report “strong” net new money in the wealth-management businesses, with net inflows of some 10.1 billion Swiss francs ($10.9 billion) in non-U.S. Wealth Management and about 2.7 billion Swiss francs ($2.9 billion) in Wealth Management Americas, which includes about 7,000 advisors. Global Asset Management experienced net outflows of 2.0 billion Swiss francs ($2.2 billion).

The investment banks also has said that it reached an agreement with the Federal Housing Finance Agency to settle claims tied to U.S. residential mortgage-backed securities (RMBS) offerings sold between 2004 and 2007.

In the first quarter of 2013, UBS had a net profit was 988 million Swiss francs ($1.06 billion), or 0.26 Swiss francs ($0.28) per share, down slightly from 1.035 billion Swiss francs ($1.11 billion) a year ago, or 0.27 Swiss francs ($0.29) per share—beating analysts’ estimates.

The company says the Wealth Management Americas unit “achieved another record profit and strong net new money inflows. In addition, asset inflows into the global wealth management businesses were nearly CHF 24 billion ($25.8 billion).

In the Americas, net new money for the first quarter of 2013 was $9.2 billion versus $4.6 billion a year ago and $8.8 billion in the fourth quarter of 2012. The company says this increase can be attributed to both newly recruited advisors and interaction with its Global Family Office operations.

On Thursday, bond insurer Syncora Guarantee sued UBS over interest-rate swaps tied to $1.4 billion of Detroit pension debt, according to a Bloomberg report.

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