UBS continued to build on its strong start to the year, reporting a 28% rise in second-quarter profits but warning that the trend could not continue into the second half of the year.
Peter Wuffli, chief executive, said the Swiss-based investment bank’s wealth and asset management operation continued to be a core part of its business, helping to offset a fall-off in its investment banking income. But he also said that while UBS had bucked its usual trend of reporting weaker results in the first half, the favourable conditions “can´t last”.
“While investor sentiment has recovered from the very low levels of last year, it still remains subdued.” He said the combination of “directionless markets“ and the prospect of higher interest rates looked likely to dampen market activity.
As a result second-half revenues are not expected to match the first half. But he said that UBS´s diversified revenue mix should help it perform strongly across all its markets.
Fee and commission income remains a key component of the bank´s business, contributing more than 50% of total revenues during the second-quarter of 2004. Favourable financing terms for clients also boosted the bank´s corporate advisory business.
However, pre-tax profits at its investment bank fell 8%, hit by a fall in investor activity and rising costs. The division´s results were also affected by $100m fine issued by the US Federal Reserve in May after it was revealed that UBS had delivered dollar banknotes to countries blacklisted by Washington such as Iran and Cuba.
For the three months to June 30 Switzerland´s biggest bank said net profits rose to SFr1.97bn ($1.57bn) from SFr1.54bn the year before, in line with analyst expectations.
For the first half of the year net profits were up 60% at SFr4.4bn.
Source: Financial Times
