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.
When an apartment comes up for rent in Germany’s big cities, hundreds of prospective tenants often queue down the street to view it, but the acute shortage of affordable housing is getting scant attention ahead of today’s snap general election. “Housing is one of the main problems for people, but nobody talks about it, nobody takes it seriously,” said Andreas Ibel, president of Build Europe, an association representing housing developers. Migration and the sluggish economy top the list of voters’ concerns, but analysts say housing policy fails to break through as returns on investment take time to register, making the
‘SILVER LINING’: Although the news caused TSMC to fall on the local market, an analyst said that as tariffs are not set to go into effect until April, there is still time for negotiations US President Donald Trump on Tuesday said that he would likely impose tariffs on semiconductor, automobile and pharmaceutical imports of about 25 percent, with an announcement coming as soon as April 2 in a move that would represent a dramatic widening of the US leader’s trade war. “I probably will tell you that on April 2, but it’ll be in the neighborhood of 25 percent,” Trump told reporters at his Mar-a-Lago club when asked about his plan for auto tariffs. Asked about similar levies on pharmaceutical drugs and semiconductors, the president said that “it’ll be 25 percent and higher, and it’ll
NOT TO WORRY: Some people are concerned funds might continue moving out of the country, but the central bank said financial account outflows are not unusual in Taiwan Taiwan’s outbound investments hit a new high last year due to investments made by contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and other major manufacturers to boost global expansion, the central bank said on Thursday. The net increase in outbound investments last year reached a record US$21.05 billion, while the net increase in outbound investments by Taiwanese residents reached a record US$31.98 billion, central bank data showed. Chen Fei-wen (陳斐紋), deputy director of the central bank’s Department of Economic Research, said the increase was largely due to TSMC’s efforts to expand production in the US and Japan. Investments by Vanguard International
WARNING SHOT: The US president has threatened to impose 25 percent tariffs on all imported vehicles, and similar or higher duties on pharmaceuticals and semiconductors US President Donald Trump on Wednesday suggested that a trade deal with China was “possible” — a key target in the US leader’s tariffs policy. The US in 2020 had already agreed to “a great trade deal with China” and a new deal was “possible,” Trump said. Trump said he expected Chinese President Xi Jinping (習近平) to visit the US, without giving a timeline for his trip. Trump also said that he was talking to China about TikTok, as the US seeks to broker a sale of the popular app owned by Chinese firm ByteDance Ltd (字節跳動). Trump last week said that he had
RSS