UBS Group AG shares dropped 1.31% on the SIX Swiss Exchange on September 22, falling to CHF 41.20, as the bank grappled with a quarterly earnings miss and looming regulatory capital requirements that could compress profitability.
The Wall Street institution posted earnings per share of USD 0.87 for the second quarter, missing the consensus estimate of USD 0.90 by USD 0.03. Quarterly revenue came in at USD 13.35 billion, slightly below the USD 13.40 billion expected, though that still represented a 13.2% increase from the same period a year earlier. Return on equity stood at 10.50%, and the net margin was 13.10%.
The broader concern for investors centers on a proposed Swiss capital rule that would require banks to hold a common equity tier 1 ratio of 90%. UBS warned on September 21 that the regulation could damage competitiveness by reducing balance-sheet capacity available for returns and growth. Research firm RBC estimated the rule change could reduce UBS earnings per share by as much as 10%.
UBS Chief Executive Sergio Ermotti said he expected profitability to improve in the third quarter, offering a counterpoint to the short-term headwinds.
The stock was trading some CHF 3.84 below its 52-week high of CHF 45.04, set on September 8, and roughly CHF 12.95 above its low of CHF 28.25 from March 23. On the New York Stock Exchange, UBS American depositary receipts traded at USD 51.07, with market capitalization of USD 159.54 billion and shares exchanged of 1,371,044. The price remained well above the 200-day moving average of USD 47.62.
