UBS pre-tax profit reached $3.6 billion in the second quarter, up 64% year-on-year, and CEO Sergio Ermotti pointed to geopolitical volatility rather than the AI correction as the headwind ahead. He said a correction was to be expected after the concentration of the past three-to-four months. UBS shares were 2.5% higher in morning trade.
UBS reported a profit rise in its second-quarter earnings Wednesday, with pre-tax profits reaching $3.6 billion, up 64% year-on-year. Net profit attributable to shareholders came in at $2.8 billion for the three-month period, in line with forecasts by analysts in an LSEG-compiled consensus poll. CEO Sergio Ermotti warned alongside those numbers that geopolitical volatility could create fresh headwinds up ahead.
Investment banking pipeline and a $3 billion buyback
Ermotti highlighted momentum across the business during the second quarter, describing the pipeline in investment banking, M&A and capital markets as very good, with positive results across leveraged capital markets, debt capital markets and equities. He also flagged a vibrant IPO market, with UBS involved in a number of deals including SpaceX's landmark debut.
The bank unveiled a new $3 billion share buyback plan, starting with the repurchase of $1 billion of shares over the next three months. Its shares were 2.5% higher in morning trade.
Ermotti shrugs off AI fatigue
Yet the risk Ermotti flagged sits outside the technology trade. He acknowledged that geopolitical fissures remain a pressure point for markets, while shrugging off potential growing market fatigue around the AI narrative. Speaking with CNBC's "Squawk Box Europe," he said ongoing volatility from the geopolitical front may create some kind of temporary headwinds, but that the momentum is good and the bank is well-positioned to capture the benefits of it.
On AI, Ermotti said a correction was to be expected given the pace and scope of the increasing market caps and concentration over the last three-to-four months: "It's only healthy to see it." He said the bank advises clients in that context always to really diversify.
Because of that, he said the Swiss banking and wealth management giant can capitalize on the diversification opportunity stemming from the correction. Ermotti said AI and its supporting infrastructure will continue to remain a big factor in markets, adding that the economic impact and benefits of AI will play out across many other sectors beyond the current concentration.
Source: CNBC
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