Investor releases

UBS reports second quarter net profit of CHF 1,974 million

Investor Releases

Second best quarterly performance since 2000, with net profit up 28% from second quarter 2003 - Half-year net profit up 60% at CHF 4,397 million - Excluding goodwill and gain from the sale of US clearing business in 2003*, net profit in second quarter up 24%, and for the first half up 50% - Operating income up 6%, driven by strong fee and commission revenues - Annualized RoE at 26.5% (29.2% excluding goodwill), earnings per share up 37% (32% excluding goodwill and disposal gain in 2003) - Net new money of CHF 16.9 billion in total, with strong CHF 10.4 billion from wealth management clients worldwide.

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UBS reports net profit of CHF 1,974 million in second quarter. This represents the second best quarterly performance since 2000, 19% lower than the record result achieved in first quarter. Compared to a year earlier, second quarter net profit rose 28% -- or 24%, once goodwill and the gain from the prior-year sale of the Correspondent Services Corporation (CSC) clearing subsidiary are excluded. For the first half of 2004, UBS records a net profit of CHF 4,397 million, up 60% from 2003 (up 50% excluding goodwill and the disposal gain).

After the very favorable business environment seen in first quarter 2004, the second quarter saw a slowdown in pace as equity investors became less active, and rising interest rates and low volatility drove volume out of the fixed income markets.

"Halfway through 2004, we can see that the markets' astonishing start to the year has settled into a more normal rhythm. In that context, this was a good quarter for UBS, demonstrating the importance of having the world's leading wealth management operation as a central part of our focused strategy," said Peter Wuffli, Chief Executive Officer.

"This quarter, strong asset-based fees from our wealth management and asset management franchises, alongside the progress of our corporate client franchise, have helped us to balance lower securities revenues," added Clive Standish, Chief Financial Officer.

Compared to second quarter a year earlier, operating income grew 6%. Fee and commission income was strong (up 12%), accounting for more than 50% of total revenues. The Investment Bank posted excellent results in its corporate advisory businesses as clients took advantage of strategic opportunities and favorable financing terms. Asset-based revenues in the wealth and asset management businesses were particularly good, with record levels of investment fund fees. In addition, the previously troubled private equity business posted another positive quarter.

Credit businesses benefited from the stable economic environment. UBS recorded a net recovery of CHF 131 million in the quarter, after net recoveries of CHF 3 million and CHF 1 million in first quarter 2004 and second quarter 2003, respectively.

The total level of invested assets rose 7% to CHF 2.2 trillion, driven by the year-on-year recovery in financial markets, as well as the CHF 85.7 billion inflow of net new money in the last 12 months. Inflows in second quarter totaled CHF 16.9 billion, with CHF 10.4 billion coming into the wealth management businesses.

Total operating expenses were up 2% in second quarter from a year earlier due to an increase in operational risk costs, among them the USD 100 million (CHF 128 million) penalty levied by the Federal Reserve Board related to the banknote trading business.

Headcount on 30 June 2004 was 66,043, up 114 from the beginning of the year. Staffing levels have increased in Europe, mainly due to the integration of acquired wealth management businesses in Germany and the UK.

In 2003, UBS's earnings deviated from their usual seasonality, with results weaker in the first half of the year than in the second. In contrast, the first quarter of this year saw excellent conditions, providing UBS with exceptional revenue opportunities. Such favorable combinations can't last -- opportunities have to be captured as they arise. However, UBS's diversified revenue mix helps the firm to perform strongly across varying market conditions. In second quarter, for instance, strong asset-based fees have helped to balance reduced securities revenues.

While investor sentiment has recovered from the very low levels of last year, it still remains subdued. Combined with directionless markets and the expectation of rising interest rates, this may continue to dampen levels of market activity.

"Since many of our businesses, especially our Investment Bank, have activity as an important driver, we should expect a return to a more normal seasonal pattern this year, with second half revenues not matching those in the first half," said Peter Wuffli.

Financial ratios
Annualized return on equity for the first six months of 2004 was 26.5%, compared to 15.1% a year earlier. Basic earnings per share were CHF 1.85 in second quarter 2004, against CHF 1.35 in the same quarter a year earlier. The cost/income ratio was 73.7% in second quarter 2004, down from 75.6% a year earlier.

Performance against UBS financial targets
(pre-goodwill and adjusted for significant financial events)
UBS sets its financial targets and evaluates performance in terms of adjusted results, excluding significant financial events* and excluding the amortization of goodwill and other intangible assets.
UBS's performance against financial targets shows:

  • For the first six months of 2004, annualized return on equity was 29.2%, up from 17.8% in the same period a year ago and well above the target range of 15 to 20%. This reflects higher net profit combined with a lower average level of equity resulting from continued share buyback programs.

  • Basic earnings per share -- at their second highest level ever -- increased by 32% to CHF 2.06 in second quarter 2004 from CHF 1.56 a year ago, driven by the same factors as return on equity.

  • The cost/income ratio was 71.2%, an improvement from 74.2% in the same period last year, reflecting higher revenues in most businesses, especially wealth and asset management, as well as credit recoveries. This was partially offset by higher operational risk costs and provisions.

For the quarter ended

Further information



Full Media Release:

Quarterly results

Further information on UBS's quarterly results is available in the Investors & Analysts section.

Further information:

  • 2Q2004 Report (pdf and interactive version)

  • 2Q2004 Results slide presentation

  • Letter to shareholders (English, German, French and Italian)

Webcast: The results presentation by Peter Wuffli, Chief Executive Officer, and Clive Standish, Chief Financial Officer, will be webcast live via at the following time on 10 August 2004:

  • 0900 CET

  • 0800 GMT

  • 0300 US EDT

Webcast playback will be available from 1400 CET on 10 August 2004, with a bookmarked version at 1800 CET the same day.

Newsphotos: Photos from the media and analyst conference will be available on 10 August 2004 from 1400 CET on the internet at

Zurich / Basel, 10 August 2004