UBS profits plunge 49 percent

Swiss banking giant UBS said Tuesday that its second quarter profits plunged 49 percent compared to a year ago as a strong Swiss franc bit into earnings and revenues slumped on economic uncertainty.

Profits reached 1.015 billion francs ($1.266 billion) for the three months ending June compared to 2.005 billion francs a year ago, and the bank warned that it would probably miss its mid-term target.  

The Zurich-based bank added that it would slash 1.5 to 2.0 billion francs in costs over the next two to three years, a move which would force it to book “significant restructuring charges later this year.”  

“Banks returns have declined overall in the last 12 months, reflecting deleveraging and the actions being taken in advance of increased capital requirements,” said Oswald Gruebel, UBS chief executive.  

“We are responding to this changed environment and the weakening economic outlook by adapting our business and increasing efficiency.  

“While our target for pre-tax profit set in 2009 is unlikely to be achieved in the original timeframe, our strong competitive positioning and our capital strength give us confidence for the future,” added Gruebel.  

UBS had previously set a target to book pre-tax profits of 15 billion francs in the mid-term.  

Net new money for the second quarter was positive, reaching 8.7 billion francs, but just a fraction of the 22.3 billion francs recorded in the first quarter, said the bank.  

Its wealth management division recorded inflows for the Asia Pacific region and the European onshore business, but the European cross-border business posted outflows amid tighter scrutiny from tax authorities.  

The investment bank division meanwhile posted sharp falls in pre-tax profit to 376 million francs from 1.314 billion a year ago, as revenues slumped across the board.  

A levy imposed by Britain on bank liabilities that takes effect at the end of the second quarter is expected to shave about 100 million francs off the investment bank unit’s pre-tax earnings in the coming quarters.  

“Current economic uncertainty shows little sign of abating,” said the bank.  

“We therefore do not envisage material improvements in market conditions in the third quarter of 2011, particularly given the seasonal decline in activity levels traditionally associated with the summer holiday season, and expect these conditions to continue to constrain our results,” it warned.


Credit Suisse slashes jobs, branches to move ‘online’

Credit Suisse, Switzerland's second-biggest bank, said Tuesday it would reorientate its domestic services towards digital banking, with a quarter of its Swiss branches to close and hundreds of jobs at risk.

Credit Suisse slashes jobs, branches to move 'online'
A Credit Suisse branch. Photo: FABRICE COFFRINI / AFP

“In the last two years alone, use of online banking at Credit Suisse has grown by approximately 40 percent, while the use of mobile banking has more than doubled,” the bank said in a statement.

“The COVID-19 crisis has further accelerated these trends. In contrast, the number of visits to branches has been declining for years.

“Credit Suisse will introduce a new digital offering and a future-oriented branch concept at the end of October.”

The bank also plans to merge the activities of regional subsidiary Neue Aargauer Bank with those under the Credit Suisse brand to avoid duplication.

READ: How to open a bank account in Switzerland 

With its realignment, the bank intends to reduce annual costs by around 100 million Swiss francs ($110 million, 93 million euros) from 2022 onwards. It plans to cut the number of bank branches from 146 to 109.

Meanwhile up to 500 jobs could be axed, Andre Helfenstein, head of the bank's operations within Switzerland, told reporters during a conference call.

The restructuring costs are expected to be 75 million Swiss francs. “Digitalisation is happening all around us,” Helfenstein said in a statement.

“The changes we are making to our branch network — while simultaneously investing in digital solutions and in advisory services for clients with more complex needs — represent a logical step forward.”

In late July, the bank's new chief executive Thomas Gottstein unveiled his plans for Credit Suisse, which involved regrouping its different investment bank activities.

Gottstein took charge in February after Tidjane Thiam was ousted over a massive spying scandal.