UBS Reports Q2 Profit Rise Amid Geopolitical Volatility Warnings

UBS reported a profit rise in its second-quarter earnings Wednesday, as CEO Sergio Ermotti warned that geopolitical volatility could create fresh headwinds up ahead. The Swiss banking and wealth management giant's net profit attributable to shareholders came in at $2.8 billion for the three-month period, in line with forecasts by analysts in an LSEG-compiled consensus poll. Pre-tax profits reached $3.6 billion in the three-month period, up 64% year-on-year.

Speaking with CNBC's "Squawk Box Europe," Ermotti highlighted strong momentum across the business during the second quarter, with a "very good" pipeline in investment banking, M&A and capital markets, and positive results across leveraged capital markets, debt capital markets, and equities. He also flagged a "vibrant" IPO market, with UBS involved in a number of deals, including SpaceX's landmark debut. The bank also unveiled a new $3 billion share buyback plan, starting with the repurchase of $1 billion of shares over the next three months. UBS shares were 2.5% higher in morning trade.

Ermotti acknowledged geopolitical fissures remain a pressure point for markets, but shrugged off potential growing market fatigue around the AI narrative. "Clearly the ongoing volatility we see coming from the geopolitical front may create some kind of temporary headwinds," he told CNBC's Carolin Roth. "But the momentum is good — we are well-positioned to capture the benefits of that." On AI, Ermotti said that given the pace and scope of the increasing market caps and concentration over the last three-to-four months, a correction was to be expected. "It's only healthy to see it. We advise clients in that context always to really diversify," Ermotti said. He said that AI and its supporting infrastructure will continue to remain a "big factor" in markets, adding that the economic impact and benefits of AI will play out across many other sectors beyond the current concentration. "This is a huge opportunity that we can give to our clients to diversify and invest for the future."