Bloomberg reports that net income declined to $434m from $1.04bn a year earlier, the bank said in a statement Tuesday.
The shares fell as UBS said Europe’s sovereign-debt crisis and doubts about the economic outlook may create further headwinds in the third quarter. Chief Executive Officer Sergio Ermotti is shrinking UBS’s investment bank to focus on wealth management as rising capital requirements and Europe’s debt woes drag on profitability.
'The investment bank has been an underperformer for a while', said Dirk Becker, a Frankfurt-based analyst at Kepler Capital Markets who has a reduce rating on UBS. 'The more assets they cut at the unit, the lower are the chances of earnings in the future'.
The investment bank had a pretax loss of $132m in the second quarter, hurt by a $356m loss tied to the Facebook stock sale. UBS said it will cut risk-weighted assets at the unit by more than previously planned.
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