(Bloomberg) -- UBS AG, Switzerland’s biggest bank, said gains at its investment bank fueled an increase in second- quarter profit and announced plans to buy back the fund set up by the central bank in 2008 to help it shed toxic assets.
The investment bank posted a pretax profit of 775 million Swiss francs ($833 million), compared with a 92 million-franc loss a year earlier, while earnings at the wealth-management division rose 11 percent to 557 million francs, the Zurich-based company said in a statement today. Net income increased to 690 million francs from 524 million francs.
UBS posted preliminary earnings last week that beat analysts’ estimates, even as it booked charges tied to an $885 million settlement with the U.S. Federal Housing Finance Agency over mortgage-backed bond sales. Chief Executive Officer Sergio Ermotti reported earnings that topped estimates for a second straight quarter after announcing plans to cut 10,000 jobs and scale back the investment bank to focus on money management.
“UBS is a beneficiary of stronger markets through faster deleveraging, improved capital markets revenues, and higher private banking activity,” Huw van Steenis and Hubert Lam, Morgan Stanley analysts with an overweight rating on UBS, wrote in a note last week. They predicted a faster-than-planned deleveraging and build-up of capital to allow UBS to make an “outsized” dividend payout in 2015.
UBS has risen 24 percent in Zurich trading this year, compared with an 8.4 percent increase in the 44-company Bloomberg Europe Banks and Financial Services Index.
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