Sergio Ermotti, CEO of UBS Group
Stefan Wermuth | Bloomberg | fake pictures
UBS announced a net profit of $ 1.23 billion for the second quarter of 2020, below 11% from the same period last year ($ 1.4 billion) when the coronavirus pandemic weighed on earnings.
Analysts surveyed by the bank expected a net profit of $ 973 million for the quarter.
The Swiss lender had reported a net attributable profit to shareholders of $ 1.6 billion for the previous quarter, as the volatility of the financial market allowed the operating profits of the Swiss investment bank to increase. However, he had warned of an uncertain future in the coming quarters as the pandemic began to spread worldwide, eventually crippling the world economy.
Increased business activity continued to bolster the bank’s earnings in the period, but was unable to offset the pandemic-induced slowdown in its retail and corporate banking units.
Here are the highlights from the second quarter earnings report:
- Operating income reached $ 7.4 billion, compared to $ 7.5 billion the previous year.
- The return on tangible capital stood at 9.6%, compared to 11.9% a year ago.
- Common equity Tier 1 capital ratio of 13.3%, up from 13.3% a year ago.
The results included expenses for credit loss of $ 272 million, of which $ 110 million were in personal and corporate banking and $ 78 million in the investment bank.
In its outlook, the bank warned that continued group credit losses could be expected in the second half of the year due to the coronavirus pandemic, but said they would be less than those seen in the first half.
UBS also said it was reviewing the combination of cash dividends and share buybacks in light of the high uncertainty surrounding the Covid-19 pandemic.
“While it is premature to provide guidance for 2020, in the future the intention is to continue to pay excess capital and to maintain overall capital returns for shareholders consistent with previous levels,” the bank said in its earnings report, adding that share buybacks may continue in the fourth quarter depending on business development and second half prospects.
In a statement Tuesday, UBS CEO Sergio Ermotti said: “As we continue to face a challenging environment, we are adapting and accelerating the pace of change, supporting our customers, employees and the economies in which we operate, while we remain focused on our strategic priorities. ” Ermotti will be replaced in the lead by ING CEO Ralph Hamers on November 1 of this year.
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