Global financial services company UBS outdid rivals thanks to strong investment banking revenues and shrinking client outflows whereas Deutsche Bank held ground after a drop in loan loss provisions.

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

Driven by strong equities and currency revenues, UBS's improved investment banking performance stood out against weak results at several US rivals in the face of sovereign debt concerns, suggesting that chief executive Oswald Gruebel's tough restructuring strategy is working.

Clients drained a total of about 5 billion francs at the Swiss bank's wealth and asset management divisions, the lowest quarterly withdrawal UBS has experienced since it started to bleed assets at the start of 2008, increasing the chance that it will stop the asset bleeding by year-end.

"The results are rather good. The rebuilding of the business is working successfully," said Helvea analyst Peter Thorne, as UBS shares were indicated to open up 5%. "We may start to see inflows at the end of this year, beginning of next."

UBS turned in a net profit of 2 billion Swiss francs ($1.90 billion), its third quarterly profit in a row after a string of losses following the financial crisis and a tax row. It was well above the forecasts for 1.34 billion francs.

Germany's top lender Deutsche Bank posted a second-quarter pre-tax profit, in line with expectations, helped by lower loan loss provisions amid weaker industry trends in investment banking.

Its corporate banking and securities division, run by 47-year-old Anshu Jain, posted 779 million euros in pre-tax profit. These accounted for the lion's share of €1.52 billion ($1.96 billion) in group pre-tax earnings.

Deutsche performed less strongly than in the first quarter, but 16% stronger than during the year-earlier period, mirroring a trend among US peers like Goldman Sachs and Morgan Stanley.

Deutsche Bank shares were indicated 1.2% lower in pre-market trade, on concerns over the bank's outlook, and on news that its trading income, traditionally a strong point, was weak.

Deutsche Bank reiterated that it expects to reach its 2011 target of €10 billion from its core businesses but added a note of caution.

"While some of the environmental variables are in line with or ahead of our assumptions, others have not yet reached the expected levels, particularly with respect to the normalisation of interest rates," the bank said in its quarterly report.

On Thursday, Credit Suisse posted a second-quarter profit of 1.6 billion francs, helped by tax and accounting gains.