The Swiss bank has recovered some of the ground lost in 2020 with a significant increase in issuance and sales in Q2 2021.

UBS has sold US$2.1 billion (1,758 products) in the US structured product market during the second quarter of 2021, compared with US$1.5 billion (889) in the same period a year prior, SRP data shows.

 

However, the current sales volume reflects a stagnation in product issuance from the previous quarter of 2021 in which the bank issued US$2 billion accounting for 1,756 products.

Over the past year, UBS has steadily boosted its issuance and sales figures which reached US$1.6 billion by the final quarter of 2020, accounting for 1,337 products.

The SRP database shows that UBS has been one of the main issuers of reverse convertible notes linked to the automobile underlying sector in Q2 21 with the most popular underlying emerging as Tesla.

Mostly falling under equity (single share, share basket, index basket), commodities, and exchange-traded funds (ETFs), the majority of the products issued by the bank in Q2 21 feature knock out, reverse convertible, worst of option, protected tracker, and enhanced tracker payoffs.

Other popular underlyings include tech giants such as Apple (US$186m/69), Amazon (US$136m/55), and Facebook (US$91m/39) as well as auto firm Ford Motor (US$44m/67) and Boeing with US$79m for 57 products.

Europe

UBS issued a total of 491 flow structured products in the European market during Q2 21 with higher concentrations in Germany and Austria.

The bank’s entire issuance has a reverse convertible payoff type while the most popular asset class is the single index equity category accounting for 487 of the products.

The products mostly wrapped as investment certificates also included medium-term notes, and are linked to five separate underlyings including the DAX (287), Eurostoxx 50 (200), Lanxess (two), Deutsche Post (one), and The Linde Group (one).

UBS also issued 58,170 structured products in the second quarter, also in the German and Austrian markets. The products are wrapped as leverage certificates (57,764) and warrants (406) while payoffs include leverage with stop loss (57,764) and capped call put (406).

Asset classes include single share equities (27,592), single index equities (24,118), commodities (4,794), and FX Rates (1,666). Underlyings are DAX (14,383), Nasdaq 100 (3,378), DJ Industrial Average Index (2,908), and Silver (2,288), and Gold (2,253).

Apac

UBS as a derivatives manufacturer has put out 54 non-flow structured products in the Asia-Pacific market, specifically in South Korea (45), and Japan (nine).

Most of the products are wrapped as equity-linked securities while the rest feature as registered notes. Payoff types include knock-out (53), worst of option (49), protected tracker (44), reverse convertible (nine), digital (eight), and uncapped call (seven).

Tesla makes a reappearance in the Asian markets as the most popular underlying accounting for 16 of the issued products. Micron Technology (10), Netflix (nine), S&P 500 (seven), and NVIDIA (seven) also emerged as dominant underlyings, according to SRP data.

A recently issued product is the ELS tied to both a single share of Tesla, along with the S&P 500 index, Kiwoom New Global 100tr Club ELS.

Business lines

The bank led by Ralph Hamers (pictured) recorded a net profit of US$2 billion in the second quarter of 2021 and US$3.8 billion accounting for the first half of the year. The net profit for the second quarter shows a 63% jump from the previous year.

The group’s profit before tax (PBT) was US$ 2.6 billion, reflecting an increase of 64% from the previous year, including net credit loss releases of US$ 80m, compared with net credit loss expenses of US$ 272m in Q2 20. Operating income increased by 21% from the previous year, while operating expenses increased by 10%.

Global wealth management reported profit before tax of US$1.3 billion in Q2 21 and US$2.7 billion for the first half of the year.

Global markets revenues decreased by 14% or US$254m, driven by lower revenues in foreign exchange, rates and credit and a loss incurred in the bank’s financing business. This was partly offset by higher revenues in equity derivatives and cash equities products.

Risk-weighted assets (RWAs) stand at US$293 trillion for the second quarter, compared with US$287 trillion in Q1 21 and US$286 trillion in Q2 20.

Click to view the bank’s second quarter earnings release.