UBS Profits Up Despite Regulatory Fines: Q2 Earnings

The company reported its profit improved 15% year-over-year in second quarter 2014, beating estimates despite muted client activity

UBS building in New York. (Photo: AP) UBS building in New York. (Photo: AP)

UBS reported on Tuesday that its profit improved by 15% year-over-year to 792 million Swiss francs ($876 million) in the second quarter, beating estimates despite muted client activity and charges resulting from litigation and regulatory matters.

Revenues in the quarter dropped about 3% from last year to roughly 7.14 billion Swiss francs, impacted by “low volumes partly offset by mandate growth,” the company said.

“The mixed outlook for global growth, the absence of sustained and credible improvements to unresolved issues in Europe, continuing U.S. fiscal and monetary policy issues, increasing geopolitical instability and the seasonal decline in activity levels traditionally associated with the summer holiday season would make improvements in prevailing market conditions unlikely,” UBS said in a press release.

Results in UBS’ wealth management businesses, Retail & Corporate and Global Asset Management groups were affected by charges for provisions for litigation, regulatory and similar matters, which totaled 254 million Swiss francs for the group.

Excluding these provisions, Wealth Management achieved an adjusted profit of 684 million Swiss francs as a result of “its strategic initiatives to grow mandate sales and lending,” the company said.

The company attracted net-new-money inflows of 10.7 billion Swiss francs into its wealth management units.

Wealth Management Americas

UBS’s Wealth Management Americas group fell 3% year-over-year and 13% from the prior period to an adjusted pretax profit of $246 million. Wealth Management Americas invested assets, though, passed $1 trillion for the first time. Revenue for the U.S.-based unit was about 1.68 billion Swiss francs, staying pretty much flat from a year ago.

Net new money outflows during the second quarter were $2.5 billion, compared with net inflows of $2.1 billion in prior quarter, according to the company “primarily reflecting client withdrawals associated with seasonal income tax payments.”

Invested assets for the Wealth Management Americas unit stand at $1.01 billion overall, up 14% from $892 million a year ago. Invested assets per financial advisor increased to $143 million, up from $139 million in the prior quarter.

Annualized revenue per financial advisor is roughly $1,068,000 vs. $1,037,000 in the first quarter.

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