UBS posts forecast-beating quarterly profit, flags $3 billion in new buybacks

By Ariane Luthi

ZURICH, July 29 (Reuters) - UBS on Wednesday booked a 17% jump in second-quarter profit that beat expectations, and said it plans to buy back shares worth $3 billion by the middle of next year at the latest.

Switzerland's biggest bank, which is waiting for clarity on new capital rules that could shape its future, said it had seen robust broad-based growth, particularly in wealth management and for its investment bank. Its trading division delivered record second-quarter revenue, in line with strong earnings both from Wall Street and European rivals.

Net profit attributable to shareholders came in at $2.8 billion versus a forecast of $2.39 billion in a company-provided poll of analysts.

UBS, which took over rival Credit Suisse after its collapse in 2023, achieved a return on Common Equity Tier 1 capital of around 17% for the first half — above its target of 15% at the end of the year.

"While the year is not over, we are close to achieving the same level of profitability UBS had prior to the acquisition, underscoring our efforts over the last three years," Chief Executive Sergio Ermotti said in a call with analysts.

Analysts described the results and the buybacks as encouraging and welcome, and UBS shares climbed 2.5% in morning trade.

But some analysts also noted the stock has had a 28% run-up over the past three months.

"We assess the bank's development positively, but consider the current share price to be fair," Zuercher Kantonalbank said in a note to clients before the market open.

For the current quarter, the bank said it expects market conditions to remain broadly constructive, though uncertainty remains high.

UBS said net new assets for its global wealth management division came in at $36 billion during the quarter, led by inflows of $14.3 billion in Switzerland.

The Americas had an inflow of $1 billion — the second consecutive positive quarter after a run of outflows due to the loss of some relationship managers. That was better than some expectations for a return to outflows.

Profit before tax in the Americas surged 47% year-on-year, though the number of advisors remained below the second-quarter level of 2025.

UBS also stressed it was investing in artificial intelligence to position the bank for the future, saying it had embarked on nine large-scale initiatives.

SHARE BUYBACKS CONTINGENT ON CAPITAL DEBATE

UBS was not alone in reporting upbeat results. Also reporting on Wednesday, Deutsche Bank posted a 10% rise in second-quarter profit, defying expectations for a drop, while Standard Chartered lifted its full-year income target.

UBS' new $3 billion share buyback program follows one of the same amount completed in July, with the bank saying it intends to repurchase at least $1 billion over the next three months.

UBS reiterated that the amount and pace of buybacks would depend on its short-term financial performance and the outcome of Swiss banking rules being debated in response to its takeover of Credit Suisse.

Concerned about the risks to the Swiss economy should UBS collapse, the government has sought to make the bank hold around $20 billion in additional Common Equity Tier 1 capital — a stance UBS has said would damage it competitively.

Lawmakers are expected to water down that requirement as they begin drafting the bill next month, as many fear requiring a permanent buffer of this scale could scare off UBS' investors.

UBS said the integration of Credit Suisse is on track to be completed by the end of 2026. It made additional gross cost savings of $1.1 billion in the second quarter, bringing cumulative gross savings to $12.6 billion.

The bank has continued to steadily reduce headcount, cutting 2,500 full-time jobs in the quarter to bring the bank's internal workforce below 100,000 for the first time since the takeover.

It reported a cost-income ratio of 72.9%, down from 80.5% a year earlier and beating a consensus forecast of 75.6%.

(Reporting by Ariane Luthi; Editing by Edwina Gibbs)