UBS U.S. Wealth Management Unit Performed Strongly in Q2

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Global Wealth Management Americas Cheif Bob McCann, a turnaround story.Our UBS correspondent, John Byrne, is currently wading through UBS earnings, and waiting for spokeswoman Karina Byrne to confirm a few facts/analysis of perfomance. But, he writes, "it looks like at least two interesting things" unfolded.

"UBS Wealth Management Americas stood out, client asset inflows better than forecast versus soft/ disappointing results for parent in Switzerland -- which was in part hammered by the strong franc, which ties nicely into the story with McCann [to appear in our August issue; apparently FA morale is up, performance per FA as measured by gross dealer concessions are up and etc.].

"BTW, it's worth mentioning that the parent, Switzerland's biggest bank, had to be rescued by the state (Switzerland) in 2008. So, that also helps puts in context what McCann has been dealing with." Q1 results also showed seeds of a turnaround. In fact, in our annual Advisor Report Card, UBS rank and file indicated that they were happier than a year ago, as evidenced by our employee satisfaction survey.

Byrne, having listened to the conference call and pawed through UBS' filings, writes:

UBS Wealth Management Americas performed strongly in the second quarter of this year. That’s as parent UBS AG, Switzerland’s biggest bank – recall this bank was rescued in 2008 by the Swiss government after breathtaking losses – reported a drop in net profit, from some $2.50 billion a year earlier to some $1.27 billion in the quarter ended June 30, 2011.

To be sure, the Americas unit reported net new money including dividends and interest of $7.9 billion, which is down six percent, or $8.4 billion from the previous quarter. Still, UBS notes that the decline reflects annual client “income-tax-related withdrawals.” In fact, NNM in the latest quarter was up a stunning 314 percent compared with NNM of $1.9 billion in the second quarter of last year. Rochdale Securities’ analyst Dick Bove said it looked like the Americas unit did just “fine” this quarter.

The Americas added 51 financial advisors (net) in the latest quarter, bringing the FA headcount to 6,862 versus 6,811 in the previous period. Meanwhile, McCann moved closer to his annual pretax profit target of $1 billion. The Americas unit reported pretax profit of $165 million, up 39 percent, or from $119 million in the previous quarter. That compares with a loss of $61 million 12 months ago. Revenue climbed by 4 percent in the latest quarter to $1,511 million, from $1,448 million in the previous; and a jump of 12 percent from $1,350 million in the second quarter of 2010.

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