UBS smashes second quarter profit expectations as Credit Suisse consolidation boosts revenue

Swiss banking giant UBS on Wednesday smashed net profit expectations for the second quarter, amid cost-cutting steps and swelling revenue at the lender's global wealth management and investment bank units.

Net profit attributable to shareholders came in at $1.136 billion for the period, versus a company-compiled consensus forecast of $528 million.

Profit was nonetheless lower than the $1.755 reported in the first quarter, as expected by analysts.

UBS shares were 3% higher at 11:35 a.m. London time.

Group revenue also beat forecasts in the second quarter, coming in at $11.904 billion versus an LSEG-compiled poll of $11.522 billion.

UBS said strong capital markets activity had partially offset a drag from net interest income, which it had previously flagged would be weaker due to lower lending and deposit volumes and lower Swiss interest rates.

In the bank's global wealth management unit, revenue increased by 15% to $6.053 billion, which UBS said was largely due to the consolidation of Credit Suisse. Revenue in the investment bank unit leapt 38% to $2.803 billion.

"Across the board we showed pretty good resilience, in investment banking, in wealth management, but also I think that we are making good progress in de-risking in our core and taking down cost there," UBS CEO Sergio Ermotti told CNBC's Silvia Amaro in a Wednesday interview.

On the profit beat, Ermotti said: "It's a combination of good momentum on the top-line, but also good progress on cost reductions."

He added that the bank was seeing good momentum from client activity and transaction volumes in wealth management, though some headwinds on its margins from lower net interest income.

It has now been over a year since UBS formally took over Credit Suisse, triggering a huge