UBS reports late, on August 14th. The bank’s 6m24 performance shown here is based on Tricumen’s early estimates.
In-scope banks reported operating revenue of $82bn in 1H24, 8% up y/y; a decline in net interest income was more than offset by investment management (especially discretionary) and transactional fees. Revenue grew across client segments, led by UHNWI/GFO and upper-end HNWI. Regionally, APAC and EMEA growth outpaced the USA, albeit from a lower base. Investment/costs, however, rose at a faster pace, and that led to flat pre-tax profits and a dip in pre-tax profit margins.
AuM grew 14% to $17.3tn, with all clients segments contributing. The strong AuM growth primarily due to strong market valuations: net new money inflows dropped 40% vs 2Q23. Amid regulatory pressure, wirehouses (though, so far, not brokerages) are raising rates on cash sweep advisory accounts, and that will have a tangible negative impact on their increasingly important net interest income. There is an inherent conflict of interest in the pricing structures, especially in managed accounts; however, custodians may argue that the pricing is transparent, sweeps are not designed for rates and/or that higher-yielding alternatives are readily available.