UBS Group AG Q2 2026 Earnings Call

Good morning. Welcome to the UBS second quarter 2026 results. The conference must not be recorded for publication or broadcast. You can register for questions at any time by pressing star and one on your telephone. Should you need operator assistance, please press star and zero. At this time, it's my pleasure to hand over to Sarah Mackey, UBS Investor Relations. Please go ahead, madam. Good morning.

Welcome everyone. Before we start, I would like to draw your attention to our cautionary statement slide at the back of today's results presentation. Please also refer to the risk factors included in our annual report, together with additional disclosures in our SEC filings. Throughout our remarks, we will refer to underlying results in U.S. dollars and make year-over-year comparisons unless stated otherwise. On slide two, you can see our agenda for today. It's now my pleasure to hand over to Sergio Ermotti, Group CEO.

Thank you, Sarah. Good morning everyone. Almost three years ago, we presented our first set of consolidated results. From the beginning, I made it clear that the acquisition of Credit Suisse was not a gift that we received, but rather a prize that we would have all had to fight to win. As expected, the journey was not a straight line. It required a lot of hard work from my colleagues at UBS and painful decisions. These efforts are paying off. The extraordinary patience and support of our shareholders is starting to be rewarded. In the first half of the year, we achieved a return on CET1 capital of around 17%. While the year is not over, we are close to achieving the same level of profitability UBS had prior to the acquisition, underscoring our efforts over the last three years.

Just as importantly, we laid the foundation to drive sustainable value creation and long-term growth, while providing enhanced capabilities to our clients and even better opportunities for our people. The second quarter provided further evidence of the power of our globally diversified franchise and our potential. Markets remained remarkably resilient. Client sentiment was constructive, supported by growing confidence in the long-term outlook for global growth and continued investment in AI and emerging technologies. Against this backdrop, our integrated One Bank model remains a key driver of growth as we deliver the full breadth of our capabilities across the firm to clients, deepening relationships and reinforcing our competitive position. This was reflected in another quarter of robust inflows into our Global Wealth Management and Asset Management platforms, which drove group invested assets to a record of CHF 7.3 trillion.

The value of collaboration is most evident in the performance of our APAC and Americas regions this quarter, where we achieved several revenue records across our franchises. Profit before tax doubled in APAC and grew by 85% in the Americas. In Switzerland, we granted or renewed around CHF 40 billion of loans to businesses and households, and we saw broad-based growth across all our businesses booked in Switzerland and for the first full quarter in which we were operating on UBS platforms. The Investment Bank delivered another quarter of exceptional returns while maintaining risk and capital discipline, a reflection of our strengthened competitive position and the enhanced scale of our platform. We are also close to substantially completing the integration by the end of the year as planned.

With all clients migrated and the wind down of Non-Core and Legacy nearing completion, more than 90% of legacy business applications are no longer in use. This enable us to accelerate decommissioning and further simplify our operations. As we realize cost synergies, we continue to strategically invest to drive long-term growth by expanding our technological capabilities, including AI, digital assets, and infrastructure. We are empowering our colleagues with the tools and skills needed to accelerate adoption and deliver greater value for clients and help improve productivity in the coming years. Our performance to date has resulted in healthy capital generation. This has further fortified our balance sheet for all seasons and allows us to continue to deploy resources towards profitable growth opportunities to support clients and deliver on our capital return ambitions.

With our latest share repurchase program just finished, we are continuing with another program under which we intend to buy back CHF 3 billion of shares at the latest by the end of the second quarter 2027. We plan to buy back at least CHF 1 billion over the next three months. The amount and pace will remain subject to our short-term financial performance and outlook, maintaining a CET1 capital ratio of around 14%, and further visibility on the deliberations by the Swiss Parliament on the capitalization of foreign subsidiaries. As we enter the third quarter, market conditions remain broadly constructive, supported by healthy client engagement, the continued broadening of market leadership, and historically elevated equity dispersion. At the same time, ongoing geopolitical developments and volatile energy prices lead to high levels of uncertainty around inflation and interest rate outlook.

This could contribute to changes in macroeconomic conditions, periods of elevated volatility, and more measured investor sentiment. In closing, we enter the second half of the year with considerable momentum, and we are well-positioned to outperform our 2026 exit rate return target and achieve our exit rate cost-income ratio target. We know that conditions can change quickly, and important work remains. As a result, we remain firmly focused on what we can control. Staying close to clients, completing the integration, executing on our growth plans, and managing risk with discipline, all while remaining a trusted partner in the communities where we live and work. With that, let me hand over to Todd.

Thank you, Sergio, and good morning, everyone. In the second quarter, we delivered reported net profit of CHF 2.8 billion and earnings per share of CHF 0.87. On an underlying basis, our pre-tax profit was CHF 3.9 billion, up 45% year-on-year, and our return on CET1 capital was 16.4%. Revenues increased by 16% to CHF 13.3 billion, and were up 14% across our core franchises. Operating expenses were 7% higher on stronger revenue performance, and were down 7% when excluding variable compensation, litigation, and currency effects. Overall, we drove eight percentage points of positive operating leverage, resulting in a cost-income ratio of 70%. Moving to slide six. Our strong second quarter results underscore our earnings power with broad-based growth across each of our core franchises, led by Global Wealth Management and the Investment Bank. This balanced performance reflects continued client momentum, the breadth of our capabilities, and the durable benefits of the integration.

On a reported basis, our pre-tax profit of CHF 3.6 billion included CHF 352 million of revenue adjustments and CHF 645 million of integration expenses. Consistent with our full-year guidance, we expect integration-related expenses in the second half to be around CHF 750 million, split roughly evenly between the third and fourth quarters as we complete the remaining work and close out the integration program by year-end. The effective tax rate was 22%, slightly below our full-year guidance of 23%. Turning to our cost update on slide seven. During the second quarter, we delivered further gross cost reductions of CHF 1.1 billion, bringing cumulative savings since the end of 2022 to CHF 12.6 billion. With more than 90% of the cost synergies expected from the acquisition now realized, we remain firmly on track to achieve our CHF 13.5 billion ambition by the end of this year.

The total headcount at quarter-end was 112,000, 4% lower sequentially, and approximately 28% below our 2022 baseline. Over the same period, we've also reduced the group's operating expenses by 28% when excluding litigation, variable compensation, and currency effects. Building on strong execution in the first quarter, we further progressed our cost actions in Q2, accelerating the realization of synergies we had expected later this year. Together with strong revenue performance, this has created additional capacity, which we are selectively directing towards investments in growth, technology, and operational resilience to strengthen our positioning for the future. At the same time, we remain firmly focused on delivering our underlying cost-income ratio target as of the end of the year. Turning to slide eight. As of the end of June, our balance sheet for all seasons consisted of CHF 1.7 trillion in total assets.

Within that, we saw 1% sequential growth in our loan book, while deposit balances were broadly stable. Credit quality within our loan portfolio remains strong, with credit-impaired exposures of 1% and a seven basis point cost of risk. Group credit loss expense totaled CHF 121 million, largely driven by stage 3 positions in Personal & Corporate Banking and the Investment Bank. Our tangible book value per share decreased sequentially by 2% to CHF 26.89, primarily as shareholder distributions of CHF 3.4 billion related to the 2025 dividend and share repurchases in the quarter more than offset total comprehensive income. On funding, having completed our AT1 plan by the end of March, we took advantage of favorable market conditions in the second quarter to pre-fund part of our future AT1 needs. Looking ahead, we'll remain opportunistic as market conditions allow.

Overall, we continue to operate with a highly fortified and resilient balance sheet, with total loss absorbing capacity of CHF 194 billion, a net stable funding ratio of 115%, and an LCR of 177%. Turning to capital on slide nine. Our CET1 capital ratio at the end of June was 14.4%, and our CET1 leverage ratio was 4.4%. Our Common Equity Tier 1 capital in the quarter decreased by CHF 0.8 billion, mainly as earnings accretion was more than offset by accruals for future capital returns, including the entirety of the new CHF 3 billion share repurchase program that Sergio highlighted earlier. The buyback accrual reduced our CET1 capital ratio in the quarter by around 60 basis points, with a 20 basis point impact on our CET1 leverage ratio. RWA increased by CHF 4 billion, while LRD was lower sequentially by a similar amount, reflecting disciplined resource deployment alongside elevated client activity.

Turning to UBS AG, the parent bank standalone CET1 capital ratio on a fully applied basis increased sequentially to 14.4%, mainly reflecting dividend payments from its subsidiaries and strong operating performance. This was partially offset by a CHF 1.8 billion dividend accrual in the quarter. Turning to our business divisions and starting on slide 10 with Global Wealth Management. GWM delivered a pre-tax profit of CHF 2 billion, up 38% year-over-year, with positive operating jaws of 7 points and double-digit growth across all regions and revenue lines. Our performance this quarter once again demonstrates the strength and breadth of our wealth franchise. The combination of leading capabilities, differentiated CIO insight, and a truly global footprint positions us to capture an increasing share of the secular growth in global wealth.

Net new assets totaled CHF 36 billion, equivalent to 3% annualized growth, and contributing to a sequential increase in invested assets of 6%. We continue to see strong demand for our CIO-led solutions, leading to CHF 13 billion of net new fee-generating assets and record mandate penetration. Clear evidence of the value clients place on our trusted expert advice. Demand for discretionary mandates remained particularly strong, including for our flagship MyWay solution, with invested assets now exceeding CHF 40 billion, up 75% year-on-year. Client sentiment remained constructive during the quarter, supporting continued releveraging across regions. Net new loans were CHF 7 billion, mainly driven by Lombard, especially in the Americas and APAC. Net new deposits were CHF 2 billion, as inflows into current and savings accounts more than offset outflows in fixed-term deposits.

From a regional perspective, Asia Pacific delivered another quarter of standout performance with pre-tax profit up 48%, a 45% pre-tax margin, and double-digit growth across all revenue lines. Asset gathering also remained strong, with annualized growth of 5% in net new assets and 8% in net new fee-generating assets. Mandate penetration increased by 5 percentage points year-on-year to a record level, underscoring how the APAC wealth team is broadening client relationships and adding another dimension to its growth through more recurring and diversified revenue streams. In the Americas, disciplined execution of our strategic priorities continues to drive stronger momentum and profitability. Pre-tax profits grew 47%, with a pre-tax margin of 16%, supported by record quarterly revenues. Net new loans were CHF 3 billion, reflecting continued traction from our enhanced banking capabilities.

Strong same-store performance drove positive net new assets of 1 billion, despite around 10 billion of seasonal tax-related outflows. EMEA delivered another strong quarter, with pre-tax profit increasing 28% and the pre-tax margin reaching 38%, alongside 12 billion of net new assets. Continued and sustained demand for CIO-led solutions drove 9% annualized growth in net new fee-generating assets, helping lift mandate penetration by 5 percentage points year-on-year and setting a new benchmark for the division. Our Swiss unit grew its pre-tax profit by 25% and attracted 14 billion in net new assets, reflecting growing client momentum and operating efficiency following the successful completion of the Swiss booking center migration last quarter. Turning to divisional revenues, which increased by 14%. Recurring net fee income grew by 11% to CHF 3.7 billion, supported by positive market performance and around CHF 70 billion of net new fee-generating assets over the past 12 months.

Transaction-based income rose 23% to CHF 1.5 billion, marking the 12th consecutive quarter of double-digit year-on-year growth. APAC and the Americas each grew transaction fees by around 30%, fueled by strong client activity in structured products and cash equities. This reflects the power of our integrated client-centric approach, bringing together GWM and the IB to deliver differentiated solutions at scale. Net interest income of CHF 1.8 billion rose by 12% year-over-year and 1% sequentially, with the quarter-on-quarter rise largely driven by higher loan volumes. For 3Q, we expect GWM NII to increase modestly, supported by further lending expansion and higher deposit margins. We now expect full year 2026 GWM net interest income to grow by around 10% versus 2025, with strong loan growth, higher US dollar rates than previously assumed, and an improved deposit mix more than offsetting margin compression in lower rate currencies.

Operating expenses in GWM rose by 6%. When excluding variable compensation, litigation, and currency effects, cost declined by 1%. Turning to Personal & Corporate Banking on slide 11. P&C delivered a pre-tax profit of CHF 676 million, up 21%, with positive operating leverage of 7 percentage points. With the final stages of client account migration successfully completed, our Swiss business entered the second quarter fully focused on growth. Strong momentum in both attracting new clients and deepening existing relationships drove positive net new clients, balance sheet expansion across both loans and deposits, and 10% annualized net new investment product growth for the first half. These higher volumes and client activity levels contributed to a 3% increase in total revenues. Net interest income increased by 1% year-on-year and 2% sequentially, driven by higher loan volumes.

We expect continuing lending momentum to support flat to slightly higher P&C NII in the third quarter. Non-interest revenue increased by 4%, led by personal banking, where custody and mandate fees benefited from positive markets and strong net new investment product flows. In corporate and institutional clients, lower activity in structured and syndicated finance largely reflected deal timing slipping into later periods. While trade and export finance remained strong, particularly among clients in the energy sector. Other revenues this quarter included valuation gains on investments. Credit loss expense was CHF 61 million, driven by stage 3 positions. Given ongoing macroeconomic uncertainty, we continue to expect credit losses in the second half to average around CHF 75 million per quarter. Reflecting the first half outcome, we now expect P&C's full year CLE to come in below our previous estimate of around CHF 300 million.

Operating expenses declined by 4%, driven by continued synergy realization and disciplined cost management. Turning to Asset Management on slide 12. Pre-tax profit grew by 9% to $237 million, with assets under management surpassing $2.2 trillion. Revenues declined by 2%, mainly reflecting the absence of fee contributions from O'Connor following its sale at the end of last year. Excluding business exit effects, revenues increased by 5% as fees from higher average invested assets were partly offset by margin pressure and an adverse year-on-year swing in net valuation effects. Net new money was $6 billion, driven by SMAs, ETFs, and Unified Global Alternatives. UGA reached $366 billion of invested assets and attracted $10 billion of new commitments across GWM and AM in the quarter.

Building on this momentum, we recently announced a strategic partnership with MSCI to enhance transparency and support growth by combining our investment expertise and client insights with MSCI's data and analytics capabilities. Operating expenses declined 6%, reflecting ongoing cost discipline and the lower direct expense base following the O'Connor disposal. We expect the sale to have broadly similar impacts on third and fourth quarter revenue and expense comparisons. On to slide 13. The Investment Bank delivered excellent results, generating record 2Q revenues, a pre-tax profit of $1.2 billion, more than double the prior year quarter, and a pre-tax return on equity of over 23%. Notably, we achieved this performance without materially expanding our balance sheet. While revenues increased 31% to $3.7 billion, RWA and LRD rose only modestly, underscoring the strength of our client franchise and our ability to capture significantly higher activity with disciplined use of financial resources.

Global Banking revenues increased by 33% to $693 million. Capital Markets was a standout, up 55%, with notable strength in LCM, where revenues more than doubled year-on-year alongside strong performances in both ECM and DCM. Advisory revenues were 5% lower, primarily reflecting an M&A market increasingly skewed toward a small number of very large transactions where participation is often influenced by broader client financing relationships. Looking ahead, our pipeline remains healthy, with strong client engagement and activity building across regions supported by close collaboration with GWM in originating advisory opportunities. Beyond the very largest deals, we continue to see good momentum across the broader advisory market, particularly in the mid to large cap segment, where our competitive position continues to strengthen. Global Markets delivered a record second quarter, with revenues increasing by 31% to just over $3 billion.

Equities led the performance, with revenues up 53% on strong client activity, elevated cash equity volumes, and exceptional momentum in Asia Pacific, where markets achieved a record quarter. FRC revenues were 21% lower, reflecting a less favorable environment for our business mix than a year ago, and disciplined resource allocation as we selectively shifted balance sheet capacity to capitalize on stronger client momentum in equities. Operating expenses increased by 11%, driven by higher personnel expenses. On slide 14, Non-Core and Legacy generated a pre-tax loss of $52 million, while we continued to drive down costs on an accelerated basis. Excluding litigation, expenses in the quarter declined 72% year-on-year and 30% sequentially, resulting in cost reductions versus the 2022 baseline of 88%. Reflecting the pace and scale of cost savings already achieved, we now expect the 2026 ex-rate for NCL operating expenses, excluding litigation, to be around $400 million.

Risk-weighted assets in NCL were broadly stable sequentially, reflecting a concentration of smaller, more bespoke positions in the residual portfolio. To close, the return on CET1 capital and the cost-income ratio we delivered in the first half of 2026 are important proof points of the earnings power and scalability of our franchise, as well as our continued cost discipline. They also demonstrate how strong client engagement, disciplined execution, and capital efficiency are translating into durable operating leverage as we enter the final phases of the integration and position the firm for future growth. With both metrics already ahead or within striking distance of our 2026 ex-rate targets, we are increasingly confident in our ability to meet and potentially exceed our financial ambitions. With that, let's open for questions.

We will now begin the question and answer session for analysts and investors. Participants are requested to use only handsets while asking a question. Anyone who has a question may press star and one at this time. The first question comes from the line of Jeremy Sigee from BNP Paribas. Please go ahead. Morning. Thanks very much.

I wanted to ask a couple of questions about the businesses, please, actually. Firstly, on the Investment Bank, I was going to ask how you balance the growth opportunity versus the balance sheet constraint that you impose on that business. You're sort of showing us here that actually you can get the revenue growth without expanding the balance sheet. I just wondered if you could talk about how you achieve that. How do you put through significantly more volume with a constrained or an unchanged balance sheet in the IB? That's my first question. The second one was just on U.S. wealth management. I know it's a familiar theme, but you saw significant further advisor exits in the quarter.

I just wondered if you could comment on those exits and more broadly, where you are in the stabilization of the U.S. wealth management franchise. Thank you. Hey, Jeremy. Thanks for those questions.

In terms of the IB, that is an excellent point you bring up and something, of course, we're very focused on. We operate within our limits. We think that's important to the value proposition that we offer, which is to run an Investment Bank that supports Global Wealth Management and also our corporate institutional clients. For us, resource allocation to the IB and within the IB is really for us stock and trade and how we're very focused. You asked about how. The focus for the business was really on intermediation within equities, is where we drove a lot of the outperformance that we had in equities. That was certainly a focus. The balance sheet, of course, within equities was used more sparingly to support Prime Brokerage financing balances.

As I also highlighted in my prepared remarks, we also allocate within the IB as we see fit and saw more opportunities in the quarter to drive some of the market's outperformance, including an intermediation, and move some of the capital allocation away from FRC into equities. On your second question, look, we're comfortable with the steps we're taking to drive full year net new assets in wealth in the Americas. We also recognize there's a lag effect from previously announced FA movement that will continue to show up in flows for a few quarters. This said, we're actively recruiting and investing in teams aligned with our profitability ambitions. It's important to note that rotation among financial advisors remains elevated across the industry given record valuations. We continue to expect these dynamics to normalize in our book over the course of 2026. Okay. Thank you. The next question comes from the line of Giulia Aurora Miotto from Morgan Stanley.

Please go ahead. Hi. Good morning.

Thank you for taking my questions. My first one is on the buyback, the $3 billion. How should we read the fact that this goes until June 27, rather than until year-end? I would guess if we get some sort of compromise in parliament, maybe it can be completed by year-end, if not by June. Any comment on how should we think about the buyback would be great. Secondly, on the parent capital, the plus 50 basis points quarter-on-quarter, any comment on that capital build, please? Thank you. Giulia, thanks for the questions.

Look, the way the share buyback language was constructed was to do a couple of things. One, we wanted to talk about a commitment of at least CHF 1 billion that we're going to do over the next three months. The program that we just announced today runs for two years. We gave an outlook that we would expect to be done latest by 2Q 2027. That's going to depend and be determined by, in terms of the timing/pace, but also the amount, by the things that we've always said. Our performance supported by markets, our capital ratio of around 14%, but also the deliberations that are ongoing in the Swiss Parliament around the Swiss capital issue. We size that timing and ultimately as these developments offer more visibility, then we can update on any changes in our expectations.

That's the way we signposted the timeline on this new program. In terms of the parent bank and the sequential build in capital, I think it's owing to a couple things. The first, of course, is the strong operating performance of the group, which manifests as well in the parent bank, among others. Also the strong operating performance in its subsidiaries allowing for stronger levels of upstreaming to the parent bank, just even ordinary dividends that we saw, for example, by the Americas in the second quarter, and also by the Swiss subsidiary. Holding revenues were also strong on top of the operating revenues. The other point, though, that counterbalances that is that we're pacing the level of dividend accrual that we're upstreaming to the group.

If you look at our first half performance in the parent bank, we've generated around CHF 5 billion of profit, and we've accrued about CHF 3.5 billion of dividends. At this point, that's reflective of our managing the parent banks on a consolidated basis, Tier 1 leverage ratio prudently. The combination of stronger performance in some and the way we're thinking about upstreaming to manage the Tier 1 leverage ratio at the parent bank on a consolidated basis contributes to the sequential growth in the parent bank standalone capital ratio.

Thanks. The next question comes from the line of Kian Abouhossein from J.P.

Morgan. Please go ahead. Yes.

Good morning. Thanks for taking my questions. First question is, both are related to Asia wealth. First question is related to ODI rules in China, which kicked in July the 1st. Just trying to understand if it had an impact on your business, and how you think about ODI impact generally on your wealth business in Hong Kong, in particular. Second question is related to Hong Kong again, where we see material growth in the affluent and also in the high-net-worth segment where you are maybe not present, especially clearly not in the affluent. Just trying to understand if you have any ambitions to expand in that area, considering the structural growth we're seeing in affluent high-net-worth Hong Kong. Thank you. Thanks a lot, Kian, for those questions.

First on ODI, it's still early. Based on what we're seeing today and the conversations we had, we don't view the evolving framework as a material constraint on the opportunity that we have, nor is it having any certainly immediate impact on flows. We see those developments primarily as more of an evolution in transparency and reporting requirements, in particular, a consolidation of existing requirements with more focus on enforcement, and specifically on offshore online brokers targeting mainland investors. We don't see that as a real catalyst for change in affecting client demand for international diversification, and it's certainly not hitting through in our numbers. I would just add that given our cross-border framework and our strong compliance mindset and discipline source of wealth standards, we also believe that we're very well positioned to navigate that evolving environment.

You asked about Asia flows and affluent ambition. I'd make a couple of points. First, we're very pleased with the position of our Asia franchise. In addition to first half NNA and an FGA annualized growth of 7% and 10% respectively, we're continuing to deliver very strong profitability and profitability growth. We're also growing clients and client assets, as well as broadening the regional contributions to client asset and profitability growth. Also, as I mentioned in my prepared comments, we're broadening client relationships and we're adding another dimension to our growth through more recurring diversified revenue streams. This quarter, as I mentioned, setting a record for mandate penetration in that part of the division. Second, Keyan, we're not standing still. We're investing selectively in areas such as high net worth, advisor capacity, particularly through digital and platform scalability to broaden our growth opportunities.

We believe that the team is doing the right things to continue to grow fast. We don't see it as a trade-off between growth and profitability. We believe we can capture both. In terms of the wealth spectrum, that is also quite a focus for the team, to continue to invest, as I mentioned, in high net worth, and to drive that. At the moment, the mass affluent is less a focus, but we believe as we build out our digital capabilities, that this is something that we can see moving into the various aspects of the wealth spectrum, including potentially the upper part of affluent.

That's interesting. May I just ask you one more, as we talked about mandate penetration, you mentioned that. Where are we on mandate penetration in GWM? We haven't had an update for a while.

Overall, we're now at sort of an all-time high across all of the sectors. APAC has come a very long way. If you look at the time series in terms of mandate penetration, it has doubled it over the last two or three years in terms of that. It really is broadening out. Not only the types of solutions it's bringing to clients, transaction-based, but also mandates. As well across the region. There's more geographic diversity within APAC as well. We're broadening that out. We're broadening out the revenue drivers. All that speaks to quite a bullish view on its growth prospects.

Thank you. The next question comes from the line of Stefan Stalmann from Autonomous Research.

Please go ahead. Good morning.

Thank you very much for taking my questions. I wanted to start with your very strong performance in equities trading. It's not quite as good as the U.S. banks, but it's better than your European peers that have reported so far. You've probably done quite a bit of benchmarking work around this. Maybe you can add a bit of color of where you think you've done better or worse than others, maybe where business mix or geographic differences play a role in explaining the relative performance versus peers. The second question is about GWM, where you mention a CHF 8 billion negative impact on invested assets from exiting certain markets or exiting certain services. Could you maybe explain what that relates to? Thank you very much. Yeah.

Hi, Stefan. The latter one was just an exit in one part of our business, a relatively small part. So it impacted on AUM, but because of the exit, didn't impact on flows in the quarter. In terms of equity trading and more color there, I'd say our geographical diversification really across the IB is a differentiator for us. So we're strong really across the globe, and with strong focus this past quarter, of course, at being able to leverage the APAC opportunity, that was quite evident in our results. I think it is the geographic diversity that is a differentiator, I would say. Our ability, as I also mentioned, to stay close to clients, the relationships that we have developed, and our ability to generate revenue growth without extending the balance sheet materially, really has been a differentiator for equities trading.

And as well- Oh, sorry.

Go ahead. No, go ahead.

I just wanted to follow up on the first point, please. The CHF 8 billion. Was it an exit from a particular geography, or was it more of a client group? Which geography would I find that in?

We'll come back on the details on that one, Stefan.

Thank you very much. The next question comes from the line of Anke Reingen from RBC.

Please go ahead. Thank you very much for taking my questions.

The first is on your return on core tier one capital. See is that you're looking to exceed your target for 2026, while I understand you might not necessarily want to update 2028 at this stage, I'm just wondering, based on structural progress you made in 2026, are you seeing potential upside to your 2028 target, or is this just trying to distinguish between cyclical versus structural progress on your ROE? Secondly, on Asia, I understand you don't want to probably comment on intra-quarter momentum, but given some of the weakness in equity markets in the region, are you seeing this as a more material headwind to your equities performance as well in the Investment Bank as well as in Wealth Management? Thank you. Thanks, Anke. On the returns, look, we're obviously quite pleased with our performance and the momentum we're seeing across the business.

We continue to have confidence in our ability to deliver against our ambitions, with the first half performance that we've delivered. As we've mentioned, we're well-positioned to achieve our targets with scope to outperform. Beyond that, specifically in terms of anything regarding 2028, we'll update you as part of our fourth quarter strategic update early next year. On your question around Asia, the performance, not sure I fully took the question, but the performance I commented in response to Kian's question about the positioning of the Asia Wealth business, I think, as well, the IB in Asia performed quite strong, and as Sergio mentioned in his comments, Asia had standout regional performance.

We see very strong continuing momentum in APAC, and we're quite encouraged about the momentum we're seeing in the outlook. I would just add maybe one other point to the prior question from Stefan, just one other differentiator across the equities is Prime Brokerage for us and the financing revenues that we've generated. Even though we've been very disciplined from a resource allocation perspective, I think the Prime Brokerage has been one area that is also differentiating us from certain of our peers.

The next question comes from the line of Andrew Coombs from Citi. Please go ahead. Morning. Perhaps one follow-up and then a fresh question on net new money.

On the equities result, you talk about having a diversified geographical mix, you do over-index in Asia, versus a number of your peers. Clearly, that's had a very strong second quarter because of the index rebalance, given what's happened in Korea, and to a lesser extent, Taiwan too. We're now seeing that reverse, so I assume that probably is beneficial for Q3 as well. Beyond that, how sustainable do you think the equities revenue strength is in Asia? Then more broadly on net new money, very healthy print in Europe and Asia, U.S. too.

Can you just elaborate on how much of that you think is cyclical related to the current IPO environment we're seeing, versus how much of that is actually structural because you've now integrated Credit Suisse, a lot of the attrition of RM is easing and in case you're actually starting to grow again in some regions. Thank you. Yeah, thanks, Andy.

On the equities strength in Asia, and the outlook. Look, I think that is the benefit of diversification that we have is that we're well-positioned to take advantage, for example, of strong equity markets and client activity levels in Asia, as we saw in the second quarter. Of course, the depth of our business across Europe, as well as in the Americas, allows us to really take advantage of wherever there are strong markets. Sure, the very strong performance and volumes that we saw in Asia in the second quarter, and the first quarter for that matter, is unlikely to continue at that level, we're well-positioned to take advantage, just given our global diversification.

In terms of the wealth management question around whether it's cyclical or structural, I would say that, of course, while supportive markets have contributed, an increasing share of the performance that we have reflects non-market factors, and this is giving me confidence around the durability and structural strength of our profitable growth trajectory through the cycle in GWM. The proof points, and I've mentioned this a couple of times, are our record mandate penetration, but also sustained transaction-based revenue, outperformance, lending momentum, and also deeper client engagement through the integrated delivery of more and more one UBS capabilities. On the structural versus cyclical question, I do think we're seeing, and that is our strategy is to push more and more into structural, so that the performance that we see is more durable.

The next question comes from the line of Benjamin Goy from Deutsche Bank. Please go ahead. Good morning.

Two questions, please, from my side. First, on a different topic, Personal & Corporate Banking. The cost base stable but clearly down year-on-year. Just wondering now the progress you have done on the integration, whether we should expect a more meaningful step down now in cost base Q3 going forward. Another question on Asia. Just wondering about your One Bank strategy, whether you can comment on the visibility of what a pipeline of inflows, also thinking about lockups coming after the IPOs in recent months and how this could support your wealth management franchise too. Thank you. Yeah. Hey, Ben.

On the second one first, in terms of the lockup issue around IPOs, I think what's important to underscore here is that our GWM performance in terms of growth and asset acquisition is not geared toward any one thing. It's quite diversified across the board. Where there's been, say, a spate of IPOs, of course, that's helpful. We think IPOs are foundational to the outlook in wealth management. That said, for us, it's not something we're highly dependent on to drive growth. As a result, of course, if there are lockups post-IPO, we're not pricing in any downturn in net new asset growth as a result of that. On the cost side, we continue to see meaningful integration-related benefits coming through wealth and P&C in the second half, including from technology decommissioning, organization simplification, and other integration actions.

We mentioned the strong execution we had in the first half, including in the second quarter, that has meant that some of these benefits were realized earlier than we had previously expected. As I mentioned in my prepared remarks, at the same time, we're selectively investing a portion of the capacity that we created into technology and other initiatives, including select advisor hiring, that support growth, productivity, and attractive long-term returns. For us, the clear guardrail remains our exit 2026 underlying cost income ratio target, and we remain firmly focused on delivering it. As we finish out the integration, we should still expect to see further benefits on our OpEx line.

Very clear. Thank you. The next question comes from the line of Amit Goel from Mediobanca.

Please go ahead. Hi. Thank you.

I've got some follow-up questions just on the U.S. wealth business. One was just on your commentary about the flows, and I guess for what we can expect going forwards. I suppose previously you said you expect the net recruiting outflow impacts to materially taper in the second half of this year. Is that still the case? Just based on some of the data, it seems like in Q2, there were still a lot of advisor outflows, so there could still be an impact into Q3. Then, just when I'm looking at the mix in terms of in the quarter, the net new assets were positive, but then the net new fee-generating assets were negative. When I look at Q2 in prior years, the net new fee-generating assets have held up better. I'm just wondering what's driving that dynamic.

Was there anything in particular this quarter to influence that? Thank you. Yeah. Hey, Amit.

First, on the wealth headcount in the U.S., just to orient. If you look at the table where we have 2% down year-on-year and 1% down quarter-on-quarter, just to sort of orient the point. The other point that's important to mention is that the reported headcount, as I've said several times in the past, the reported headcount numbers reflect the lag in timing because that's actually when the advisors either come on when recruited or come off when they move our payroll. There is a lag in that.

I think what's important, the broader point I would make is that we expect as we work through the issue, which we continue to do, that this will have a tapering impact, which is why we've been forecasting and guiding on positive net new assets for the year, contributing from wealth in the Americas. We expect the trend to continue and would expect an improving second half as well. We are continuing to maintain that wealth in the Americas will be a positive contributor to net new assets for the full year 2026. In terms of net new assets versus NNFGA, nothing I would call out. We've had very strong net new fee-generating asset growth.

When you look back over the last 12 months, I'd say I wouldn't overread into one quarter versus the other in terms of whether we're indexed more into net new fee-generating assets versus net new assets. Nothing I would take away or no one particular driver that I would call out in explaining the delta between the two metrics. Just over time, they're both meeting our expectations, and that's really the more important point.

Thank you. The last question comes from the line of Joseph Dickerson from Jefferies.

Please go ahead. Hi. Thank you for taking my question, and congratulations on a very robust set of results.

The question I had is you've guided the GWM NII to grow by around 10% versus 25. It's interesting because this number is quite some ways ahead of where the market expectations are. Could you just kind of break that down a little bit in terms of what is rates versus volume, or is this just frankly because you've seen a better result in lending volumes and deposit margins are remaining robust? I guess what I'm getting at is what element, if any, is differential in interest rates, or is it really on volumes? Secondly, I guess strategically on Asset Management, is this a business that you are if you look at the business, it's not a large part of the group. I guess how fungible is it with the group?

It's been, I think, slightly underwhelming the past few quarters. Is this a business that you intend to keep strategically? I know there was speculation over the years about it, but any comment on that business and the strategic rationale with the rest of the group would be great. Thank you. Hey, Joe. Let me address the first question.

On GWM, I did mention that the guidance that I offered around 10% up year-over-year was in part supported by higher rates, also lending growth, and also a favorable deposit mix. Really breaking that down, I would say that moderately higher dollar rates, now that our outlook would suggest moderately higher US dollar rates, that creates structural tailwind for the business. That comes from asset yields from loans and also our replicating portfolio as those yields grind higher and are only partially offset by higher deposit costs that are tempered by our deposit mix remaining healthy. That's the way I think about it and drives the revised year-over-year look.

Great. That's helpful. On Asset Management, I would say that, first of all, I think from a strategic standpoint of view, it fits very well the thematic of us being an asset-gathering center organization.

Also if I look at what we do within Asset Management, first of all I would like to highlight that the good momentum in reshaping and restructuring the business, basically disposing activities that were quite dilutive to our cost/income ratio and really getting it focused with a good progress towards achieving a strong relative performance also vis-à-vis our peers. When I look at within that, I see a lot of potential for us to continue to grow. First of all, when you look at our alternative space, we are a top LP in alternatives. You saw the good inflows during the quarter and the good momentum we are having.

We are also developing strong focus capabilities on passive ETFs. From a geographic standpoint of view, we are expanding our capabilities, also our joint ventures with external partners. I'm very happy to see the good momentum, which I believe justify us continue to invest in this business and position it as a strategic element of our asset-gathering center story. I think it's an integral part of our equity story.

Thank you. We have no further questions, so we'd like to close the call and thank everyone for dialing in and asking their questions today.