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.
Shares of contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) came under pressure yesterday after a report that Apple Inc is looking to shift some orders from the Taiwanese company to Intel Corp. TSMC shares fell NT$55, or 2.4 percent, to close at NT$2,235 on the local main board, Taiwan Stock Exchange data showed. Despite the losses, TSMC is expected to continue to benefit from sound fundamentals, as it maintains a lead over its peers in high-end process development, analysts said. “The selling was a knee-jerk reaction to an Intel-Apple report over the weekend,” Mega International Investment Services Corp (兆豐國際投顧) analyst Alex Huang
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is expected to remain Apple Inc’s primary chip manufacturing partner despite reports that Apple could shift some orders to Intel Corp, industry experts said yesterday. The comments came after The Wall Street Journal reported on Friday that Apple and Intel had reached a preliminary agreement following more than a year of negotiations for Intel to manufacture some chips for Apple devices. Taiwan Institute of Economic Research (台灣經濟研究院) economist Arisa Liu (劉佩真) said TSMC’s advanced packaging technologies, including integrated fan-out and chip-on-wafer-on-substrate, remain critical to the performance of Apple’s A-series and M-series chips. She said Intel and Samsung
POWER BUILDUP: Powered by Nvidia’s B200 Blackwell chips, the data center would support MediaTek’s computing power demand and business growth, the company said Smartphone chip designer MediaTek Inc (聯發科) yesterday launched a new artificial intelligence (AI) data center with a maximum capacity of 45 megawatts to meet its rising demand for computing power required to develop new advanced chips for AI applications. The company has completed the first-phase computing power buildup at the data center in Miaoli County’s Tongluo Township (銅鑼), providing 15 megawatts of capacity to support its research and development (R&D) capabilities, despite an industrywide shortage of key components, MediaTek said. Supply constraints have plagued a wide range of key components, including memory chips, solid-state drives, power supply units and central
TRANSITION: With the closure, the company would reorganize its Taiwanese unit to a sales and service-focused model, Bridgestone said Bridgestone Corp yesterday announced it would cease manufacturing operations at its tire plant in Hsinchu County’s Hukou Township (湖口), affecting more than 500 workers. Bridgestone Taiwan Co (台灣普利司通) said in a statement that the decision was based on the Tokyo-based tire maker’s adjustments to its global operational strategy and long-term market development considerations. The Taiwanese unit would be reorganized as part of the closure, effective yesterday, and all related production activities would be concluded, the statement said. Under the plan, Bridgestone would continue to deepen its presence in the Taiwanese market, while transitioning to a sales and service-focused business model, it added. The Hsinchu
RSS