UBS Group AG yesterday signaled that the worst hit of the COVID-19 pandemic on its balance sheet might be over, prompting the bank to consider reviving shareholder payouts after costs to cover soured loans peaked in the first half.
The Swiss bank — while warning there was plenty of uncertainty ahead — attracted US$9 billion of net new money at its private banking business in the second quarter and posted higher transaction-based income as clients boosted trading in volatile markets.
While credit loss expenses are to remain high in the coming months, they would not match the US$540 million posted in the first half, it said.
Photo: Bloomberg
UBS, which serves mostly wealthy clients and does not do a lot of corporate lending, has been relatively shielded from the defaults which prompted Wall Street firms to set aside tens of billions of dollars to cover an expected wave of bankruptcies.
At the same time, it also benefited from the trading bonanza that saw Wall Street firms post record profits — fixed-income trading revenue at the investment bank more than doubled.
The issue of dividend payments and buybacks has been controversial because of the relief that banks have received from regulators to help them withstand the crisis.
UBS and Credit Suisse Group AG were among the last European firms to delay their dividend after the Swiss regulator followed its European counterparts by pressuring lenders to suspend payouts because of the economic uncertainty.
UBS chief executive Sergio Ermotti said that he is now confident that the bank would pay the second tranche of its dividend in the second half. UBS stopped a US$450 million buyback program in March because of the pandemic.
The bank added US$272 million to its loan loss provisions during the second quarter, slightly below estimates, with Europe starting to reopen businesses.
The bank said that the majority of its credit exposures are of high quality, in part reflecting the wealth of its home nation.
The wealth unit, the bank’s largest contributor of revenue, said that net new money was positive across the regions.
Recurring net fee income declined 8 percent at the wealth management business, mostly reflecting lower invested assets at the beginning of the quarter.
Profit at the wealth unit was supported by a strong performance in Asia, which made up for a 37 percent drop in profit year-on-year for the business in the Americas.
Ermotti, who is to step down at the end of October, has scaled down trading after the financial crisis, though the bank still has a sizeable equities business.
Hon Hai Precision Industry Co (鴻海精密) yesterday said that its research institute has launched its first advanced artificial intelligence (AI) large language model (LLM) using traditional Chinese, with technology assistance from Nvidia Corp. Hon Hai, also known as Foxconn Technology Group (富士康科技集團), said the LLM, FoxBrain, is expected to improve its data analysis capabilities for smart manufacturing, and electric vehicle and smart city development. An LLM is a type of AI trained on vast amounts of text data and uses deep learning techniques, particularly neural networks, to process and generate language. They are essential for building and improving AI-powered servers. Nvidia provided assistance
DOMESTIC SUPPLY: The probe comes as Donald Trump has called for the repeal of the US$52.7 billion CHIPS and Science Act, which the US Congress passed in 2022 The Office of the US Trade Representative is to hold a hearing tomorrow into older Chinese-made “legacy” semiconductors that could heap more US tariffs on chips from China that power everyday goods from cars to washing machines to telecoms equipment. The probe, which began during former US president Joe Biden’s tenure in December last year, aims to protect US and other semiconductor producers from China’s massive state-driven buildup of domestic chip supply. A 50 percent US tariff on Chinese semiconductors began on Jan. 1. Legacy chips use older manufacturing processes introduced more than a decade ago and are often far simpler than
STILL HOPEFUL: Delayed payment of NT$5.35 billion from an Indian server client sent its earnings plunging last year, but the firm expects a gradual pickup ahead Asustek Computer Inc (華碩), the world’s No. 5 PC vendor, yesterday reported an 87 percent slump in net profit for last year, dragged by a massive overdue payment from an Indian cloud service provider. The Indian customer has delayed payment totaling NT$5.35 billion (US$162.7 million), Asustek chief financial officer Nick Wu (吳長榮) told an online earnings conference. Asustek shipped servers to India between April and June last year. The customer told Asustek that it is launching multiple fundraising projects and expected to repay the debt in the short term, Wu said. The Indian customer accounted for less than 10 percent to Asustek’s
Gasoline and diesel prices this week are to decrease NT$0.5 and NT$1 per liter respectively as international crude prices continued to fall last week, CPC Corp, Taiwan (CPC, 台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. Effective today, gasoline prices at CPC and Formosa stations are to decrease to NT$29.2, NT$30.7 and NT$32.7 per liter for 92, 95 and 98-octane unleaded gasoline respectively, while premium diesel is to cost NT$27.9 per liter at CPC stations and NT$27.7 at Formosa pumps, the companies said in separate statements. Global crude oil prices dropped last week after the eight OPEC+ members said they would
RSS