By Pietro Lombardi
(Updates with analysts comment, details on business units.)
UBS Group AG /zigman2/quotes/206172872/composite UBS +0.74% said Tuesday that net profit rose in the second quarter as its investment bank beat expectations while its key wealth-management business slightly missed consensus.
The Swiss banking giant's net profit grew 9.4% to 1.28 billion Swiss francs ($1.29 billion), while operating income increased to CHF7.55 billion from CHF7.27 billion a year earlier.
Analysts had expected net profit to stand at about CHF1.02 billion and had forecast adjusted operating income of CHF7.38 billion, according to a consensus forecast provided by UBS.
The bank's results were "relatively solid," according to analysts at Baader Helvea Equity Research. "But we see also a couple of weaker data points, which might overshadow the headline beat."
Among the negatives, they mentioned outflows in wealth management, while "the outlook is rather more cautious than usual, pointing to dampened investor confidence and muted market volatility."
The bank's key global wealth-management unit reported pretax profit of CHF1.04 billion, slightly below expectations, with CHF1.2 billion in net new money outflows in the quarter. This "included higher seasonal tax-related outflows in the U.S. of approximately CHF4.6 billion and a single outflow of around CHF4.4 billion in the Americas from a corporate employee share program," UBS said.
The Swiss bank reported a sharp increase in pretax profit at its investment bank operations, which came in at CHF569 million. This compares with expectations of CHF397 million.
Over the past years UBS has sharpened its focus on wealth management while streamlining its investment banking operations.
"Global economic-growth prospects continue to provide a supportive backdrop to markets, although ongoing geopolitical tensions and rising protectionism have dampened investor confidence and remain a threat," UBS said in a statement.
Looking to the third quarter, the bank said market volatility "remains muted overall" and that is "usually less conducive to client activity."