UBS beat earnings expectations for the second quarter as the rich invested money in its flagship wealth management business.

The Swiss banking giant on Tuesday reported net income attributable to shareholders of $ 2 billion for the second three months of the year. This represents an increase of 63% over the same period last year and, according to Refinitiv data, is well above analysts’ expectations of 1.34 billion US dollars.

In its earnings report, UBS attributed the success to “favorable market conditions and investor sentiment” along with “continued momentum in cash flows and volume growth”.

Further highlights of the quarter:

  • Operating income reached $ 8.98 billion compared to $ 7.4 billion a year earlier.
  • The return on equity was 15.4% compared to 9.7% in the previous year.
  • The CET 1 ratio, a measure of the solvency of banks, reached 14.5% compared to 13.3% a year ago.

“Our growth in the second quarter was supported by the relationships we built and strengthened during the pandemic, as well as our clients’ trust in our people and our company. All businesses and regions contributed to our results,” said UBS – CEO Ralph Hamers said in a statement.

“The momentum is on our side and our strategic decisions and initiatives are paying off. And we strive to make the best of the future.”

Hamers told CNBC on Tuesday that the bank’s strategic focus on specific sectors and customers is now manifesting itself in increased demand.

“All the changes that we have made in the banking sector in the last year or two are made [are] They really do pay off, and with that you actually see that we are gaining market share. It’s because of the focus on our customer franchise, “he said.

Asset management boom

The bank’s flagship Global Wealth Management was the largest contributor to results, increasing quarterly profit before tax by 47% to $ 1.3 billion. Recurring commission income also rose by 30%.

This, combined with good market conditions, helped invested assets in the global wealth management business grow 4% to $ 3.2 trillion.

Hamers said that while strong market momentum has fueled the wealth management business and continued to fuel client asset demand, the underlying trends are also encouraging.

“We are absolutely benefiting from market developments, but if you look at the inflows of fee-generating net worth of $ 25 billion in just one quarter in wealth business, if you increase underlying transaction income by 16%, you see it is a real one There is an increase in activity, including from customers and not just from the market, “he told CNBC’s Joumanna Berceche.

In a recorded message released along with the earnings report, Hamers highlighted that credit card transactions in Switzerland had almost returned to pre-Covid levels as investors around the world became more optimistic about the short-term economy.

“If I were to characterize the last quarter with just one word, it would be: swing,” said Hamers.

Switzerland’s largest lender also emerged from the shadow of the collapse of the US hedge fund Archegos Capital. The scandal caused profits to decline $ 774 million in the first quarter and stunned investors.

Although not mentioned in the second quarter report, the bank previously said that it had given up all holdings in Archegos and that any losses in the second quarter would be “negligible”.