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ZURICH - Swiss bank UBS, the world's largest wealth manager, beat forecasts with record second-quarter profits but warned that market turmoil was likely to hit its investment banking business in the second half of the year.
Net second-quarter group profit rose to 5.622 billion francs ($6.4 billion) from 3.147 billion francs in the second quarter of 2006.
In an explicit warning that the upheaval in credit markets is likely to take a heavy toll, UBS said that if turbulent conditions prevailed throughout the third quarter, "UBS will probably see a very weak trading result in the investment bank".
UBS is the first big bank to comment on trading conditions since last week's havoc in financial markets forced central banks to intervene in the interbank lending market to restore order.
UBS drew a line under its hedge fund, Dillon Read Capital Management, which it said was closing in May after running up big losses.
- Reuters
