The wealth management arm of UBS, both in the Americas and rest of the world, reported client inflows in the second quarter of 2012, albeit with slightly mixed fortunes in terms of pre-tax profits. However, the investment banking business was hit by the Facebook initial public offering, saying it will take legal action to recover potential losses amid the mishandling of the IPO by NASDAQ.
The Zurich-listed firm said wealth management's second quarter pre-tax profit (not including Americas) was SFr502 million (around $512 million), down from SFr803 million in the previous three months, mainly as the firm included a credit to personnel expenses of SFr237 million, largely due to changes in its Swiss pension plan. Adjusted for this item and restructuring costs, pre-tax profit dropped by SFr75 million to SFr503 million.
The gross margin on invested assets at UBS fell by 4 basis points to 89 bps, mainly reflecting lower client activity levels. Net new money increased to SFr9.5 billion from SFr6.7 billion in the previous quarter, with strong growth in the Asia-Pacific region helping boost the figures.
Invested assets increased to SFr783 billion. The annualized net new money growth rate was 4.9 per cent compared with 3.6 per cent in the previous quarter.
Wealth Management Americas recorded a pre-tax profit in the second quarter of $211 million, a slight increase from the prior quarter's record profit of $209 million, as a 1 per cent rise in operating income was only partially offset by an increase in operating expenses.
The second quarter's result included $63 million of realized gains in the investment portfolio, an increase over the prior quarter, and an increase in net fee and commission income that offset the combined effect of reduced net interest and trading income and higher operating expenses.