UBS reported higher second quarter profit for 2013 despite concluding an in-principle agreement with U.S. housing agencies to settle mortgage claims.
Enthused by Switzerland’s largest bank posting a higher second quarter profit, its stock jumped 4.2 percent in Zurich to a two-year high.
UBS indicated its strong results reinforce significant progress made by the bank in executing its strategy despite concluding an agreement with FHFA.
UBS settlement with FHFA
The bank has indicated that it has reached an in-principle agreement with the Federal Housing Finance Agency (FHFA) to settle claims relating to U.S. residential mortgage-backed securities offerings between 2004 and 2007.
However, UBS didn’t disclose the cost of the settlement with FHFA.
Switzerland’s largest bank anticipates its second-quarter profit attributable to shareholders to jump to $734 million (690 million Swiss Francs).
UBS AG to brace flurry of legal battles
The Zurich-based bank has to face a plethora of legal battles from various regulators.
Last month, ACP, the top regulator in France, fined UBS AG (NYSE:UBS) $13.1 million as the bank did not provide the appropriate controls needed to prevent its sales staff from helping client dodge taxes in France.
Earlier, European Commission has charged 13 investment banks, including UBS, of blocking entrants into the credit default swap market.
Last week, U.S. appeals court rejected claims from 14 banks, including UBS to intervene in their cases with the FHFA.
UBS AG (NYSE:UBS) set aside a total of $920 million (865 million Swiss Francs) in the quarter to cover litigation costs, provisions, and writedowns related to the deal and a Swiss tax agreement with Britain.
UBS AG posts strong results
UBS’ second-quarter results include pre-tax charges totaling about 865 million Swiss Francs for all litigation matters besides certain other significant provisions and an impairment of financial assets.
The bank’s wealth management division attracted 10.1 billion francs of new money and its U.S.-based brokerage attracted 2.7 billion. However, UBS’ asset management arm saw an outflow of 2 billion Swiss Francs.
The Zurich-based bank attracted the most customer money in six years in the first quarter.
UBS is set to announce its full financial report for the second quarter of 2013 on July 30, 2013.
