UBS dropped their 2Q results this week and it was solid as expected. Earnings, wealth inflows and investment banking all ahead of expectations. The bank also announced a new US$3 billion buyback.
Net income rose 17% to US$2.8 billion, while pretax profit increased 64% to US$3.59 billion. Global Wealth Management attracted US$35.5 billion of net new assets, comfortably ahead of expectations, while Investment Bank revenue rose 26%.
Key highlights:
- EPS of US87c, ahead of US75c expected.
- Wealth Management pretax profit up 56%.
- Investment Bank pretax profit more than doubled.
- Return on tangible equity of 13.4%.
- Cost-to-income ratio of 72.9%, better than expected.
- A new US$3 billion share buyback, including at least US$1 billion over the next three months.
UBS remains on track to substantially complete the Credit Suisse integration by year-end, with cumulative cost savings now at US$12.6 billion.
Another strong result, supported by excellent wealth inflows, improving operating leverage and a better-than-expected Investment Bank performance. The buyback is also supportive, although after a 41% rally over the past year and the stock trading near a 19-year high, expectations are now elevated. We continue to hold UBS, but see the risk/reward as more balanced after the recent run.
