Swiss bank UBS AG yesterday offered evidence of its recovery with a stronger-than-expected second-quarter profit of 2 billion Swiss francs (US$1.9 billion), and said it should resolve all tax matters with the US government by October.
The Zurich bank’s results compared with a SF1.4 billion loss in the second quarter of last year and far exceeded analysts’ forecasts.
UBS was boosted by a strong performance from its investment bank, whose pretax profit rose 10 percent to SF1.3 billion at a time crosstown rival Credit Suisse and US banking giants experienced a slowdown in the sector. Earnings were boosted by a SF595 million credit gain on financial liabilities.
PHOTO: EPA
“This was a good result in volatile market conditions and demonstrates the progress we are making,” UBS chief executive Oswald Gruebel said yesterday. “I remain confident in our future and I firmly believe that we have the right strategy in place.”
UBS said it also expected an end to its US regulatory problems now that the Swiss parliament has approved closer cooperation with the US Internal Revenue Service. The bank has agreed to turn over 4,450 names of wealthy Americans suspected of dodging taxes through secret accounts.
UBS and Credit Suisse were given a clean bill of health last week by the Swiss financial regulator, which released findings from its “stress tests” to coincide with the results of a much larger examination by the EU.
Credit Suisse Group also beat market expectations last week as it announced a second-quarter net income of SF1.6 billion.
In Germany, Deutsche Bank AG, Germany’s biggest lender, yesterday reported an unexpected 9 percent rise in second-quarter earnings as gains at its transaction banking and asset management operations helped counter a weaker investment banking performance.
The Frankfurt-based bank said net profit rose to nearly 1.2 billion euros (US$1.55 billion) from 1.1 billion euros a year earlier — beating analysts’ forecast of 1.05 billion euros. Pretax profit rose 16 percent to 1.5 billion euros.
The bank said overall revenue declined in the second quarter — a volatile quarter that included the peak of the eurozone debt crisis — to 7.2 billion euros from 7.9 billion euros a year earlier.
However, loan loss provisions declined sharply to 243 million euros from 1 billion euros in last year’s second quarter.
“In a quarter which was characterized by increased investor uncertainty and higher market volatility, Deutsche Bank’s investment banking business followed the industry-wide trend of weaker profitability,” CEO Josef Ackermann said in a statement.
However, he pointed to “very solid” performances from other divisions and said the bank’s private and business client segment had its best quarterly result since the peak of the financial crisis — demonstrating “the strength of our diversified business portfolio.”
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