What happened
Shares of the Swiss bank UBS Group (UBS -0.21%) traded more than 9% lower as of 10:08 a.m. ET today after the bank reported disappointing earnings results for the second quarter of the year.
So what
UBS reported a profit of $2.1 billion on total revenue of roughly $8.9 billion, both numbers that fell short of analyst estimates.
"The second quarter was one of the most challenging periods for investors in the last 10 years. Inflation continues to be high, the war in Ukraine is ongoing, as are strict Covid policies in parts of Asia," UBS CEO Ralph Hamers said in an earnings statement.
He added: "In these uncertain times, our clients rely on our powerful ecosystem to navigate markets and invest for the long term."
Like most of the industry, UBS took a big hit within its investment banking business during the quarter, with total revenue down 14% year over year and 28% from the previous quarter. The decline was driven by a 57% drop in global banking revenue and a 71% drop in capital markets revenue, slightly offset by gains in its trading business.
Now what
It was obviously a tough quarter for UBS amid a tough backdrop, but the bank will also benefit from higher interest rates as the year progresses. It may not be an easy rest of the year, but as it's trading around tangible book value, or its net worth, I do think there could be upside for the bank on a long-term basis.
