Despite outflows from its U.S. wealth management unit, UBS AG reported stronger second quarter results Tuesday as outflows from its private bank continued to slow.
The Zurich-based company’s U.S. wealth management arm recorded a $63.7 million loss. The company attributed the loss to restructuring charges. The parent bank reported a profit of $1.91 billion, up from a loss of $1.33 billion a year earlier.
Globally, UBS’ wealth management business had struggled over the past couple of years as it battled with U.S. regulators over releasing the names of clients that have used the company to avert U.S. taxes. UBS agreed to release the names of over 4,450 clients with hidden UBS account by the end of next month. As a result, clients withdrew $219.9 billion globally from the company between January 2008 and March.
The company had $7.7 billion of outflows from private clients in the second quarter. This was half the amount of the previous quarter and the lowest level since the beginning of 2008.
Executives said during a conference call Tuesday that they expect to add more private bankers as it launches a new hiring campaign.
UBS reported that its U.S. wealth management business had $2.47 billion in net new money outflows in the second quarter. John Cryan, the parent company’s chief financial officer, said during the company’s second quarter earnings call that he thinks UBS is about to see a turning point in new money for its wealth management business.
The parent bank UBS was buoyed by its investment bank, which reported a pre-tax profit of $1.25 billion in the second quarter, from a a loss of $1.75 billion a year earlier.
Excluding the restructuring charge, pretax profits for the U.S. wealth management division was $72 million.
A spokeswoman for UBS said that the U.S. wealth management unit attracted positive net new money, if you factor in interest and dividend, while other large competitor. She said the company remains confident it is doing well as compared to its peers.
"Our net new money is from 'same store FAs' or FAs who have been with UBS for more than a year, so the money is coming from clients trusting their UBS advisor with more of their assets or new clients signing on, we're not just recruiting our way to [net new money,]" she said.
For the U.S. wealth management arm, operating income increased 9% and recurring income rose 12% as revenue per advisor rose.