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July 27, 2015 at 01:18 PM
UBS Group (UBS) reported a second-quarter 2015 net profit of 1.2 billion Swiss francs ($1.3 billion) on Monday, up 53% compared with the second quarter of 2014, with diluted earnings per share of 0.32 Swiss francs.
Its overall revenue increased 8.5% from a year ago to 7.8 billion Swiss francs ($8.1 billion) in the second quarter.
“I am pleased with the quarter,” said Sergio P. Ermotti, group chief executive officer at UBS, in a statement. “We maintained our momentum despite ongoing market challenges.”
The group’s wealth management operations in the Americas reported an adjusted profit before tax of $231 million, a drop of nearly 7% from the same year-ago period and close to 27% from the prior quarter.
UBS attributes this to increased expenses – up 6% from last quarter and almost 4% year-over-year – related to higher litigation charges and legal fees.
Wealth Management Americas’ expenses increased “mainly due to $71 million higher charges for provisions for litigation, regulatory and other matters as well as $21 million higher legal fees,” according to its earnings reports.
“UBS believes that the industry continues to operate in an environment where charges associated with litigation, regulatory and similar matters will remain elevated for the foreseeable future and the bank continues to be exposed to a number of significant claims and regulatory matters,” the company said in a statement.
Personnel expenses also marginally increased this quarter to $1.2 billion up roughly 1% from both last quarter and a year ago, reflecting higher financial advisor compensation on higher compensable revenues.
Meanwhile, recurring net fee income and total operating income increased to record levels, the company says. Its operating income increased to $1.95 billion, up from $1.90 billion year-over-year and $1.90 billion in Q1’15.
Recurring net fees were up 4% from last year and up 2.5% from the first quarter 2015. “Recurring net fee income increased on higher managed account fees,” according to its earnings report. “Net interest income increased primarily due to continued growth in loan and deposit balances as well as higher income from the financial investment available-for-sale portfolio.”
