UBS Profits Jump 53% Despite Libor Guilty Plea
Switzerland's largest bank UBS on Monday posted a 53 percent rise in second quarter profits, in its first results since agreeing to plead guilty to fraud as part of the Libor manipulation case.
The bank brought in profits of 1.2 billion Swiss francs ($1.25 billion, 1.1 billion euros), with strong performances from its wealth management, corporate and investments units.
The bank said it had showed "resilience" in the face of economic uncertainty and rising costs caused by a strong Swiss franc, among other headwinds.
"I am pleased with the quarter. We maintained our momentum despite ongoing market challenges," chief executive Sergio Ermotti said in a statement.
The U.S. department of Justice in May dropped charges against UBS as part of a probe into currency rigging, granting it conditional immunity for cooperating with authorities.
But as part of its deal with U.S. officials, a 2012 non-prosecution agreement in connection with Libor interest rate manipulation was revoked.
UBS agreed to plead guilty to one count of wire fraud in the Libor affair, pay $203 million in fines and accept a three-year probation.
Both UBS and analysts had predicted that the fines would not have a meaningful impact on second quarter results.
UBS had been fined the equivalent of $1.5 billion in 2012 by U.S., British and Swiss regulators for its role in the massive misconduct in the setting of the Libor rate, a global reference that affects products from student loans to mortgages.
Executives at the bank have blamed the misconduct in the Libor matter on an isolated number of employees.
Concerning the rigging of the foreign exchange market, six major global banks have been fined a total of almost $6 billion.
- Strong performance -
The Swiss bank on Monday said that as of June 30 it had 2.4 billion Swiss francs set aside as provisions to cover future litigation costs, down from just over 2.7 billion Swiss francs at the end of March.
But its wealth management unit in the America's has been negatively impacted by higher litigation provisions, the bank added.
But in a sign that the bank was moving past its legal and regulatory troubles, UBS said its wealth management division posted its best second quarter results since 2009, with a pre-tax profit of 769 million Swiss francs.
The investment bank division also brought in 617 million Swiss francs in profits before tax, one of its best performances in recent years.
The retail and corporate unit posted its best second quarter results since 2010, with a pre-tax profit of 414 million Swiss francs.
UBS has like other Swiss businesses seen its costs climb because of the strong franc.
The federation's central bank in January announced the end of efforts to hold down the Swiss franc against the euro, sending the currency soaring.
Cost increases caused by the strong currency and continuing uncertainty in the eurozone, including over Greece's future, "are likely to remain unresolved in the forseeable future," the bank said.
Source: Agence France Presse
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