Switzerland's UBS reported a surge in profit today but the world's seventh-largest bank cautioned that rising interest rates and wary investors would pressure earnings over the rest of the year.
Second-quarter net profit rose to 1.974 billion Swiss francs ($1.57 billion) from 1.54 billion one year ago but was down from the first quarter's 2.42 billion, which had been boosted by unusually strong trading income.
"The second half should not match the first half," Chief Executive Mr Peter Wuffli said, citing dampened investor sentiment and flagging financial market activity.
UBS, the world's biggest asset manager by far, joins a chorus of banks predicting weaker markets.
Highlighting increasingly tough trading conditions, UBS's Value at Risk, a key measure of how much money a bank has exposed to the markets, fell by 9 per cent - a telling pullback given the bank's recent efforts to increase its exposure.
"We have decided to take some risk off the table because trading will be less favourable," Mr Wuffli said.
UBS shares, which have outperformed their sector by close to 2 per cent this year, were trading flat at 81.65 Swiss francs this morning, in line with its European peers.
"The outlook is very cautious as a result of the reserved investor sentiment," ZKB analyst Mr Christoph Ritschard said in a note. "The valuation is very favourable . . . however, the outlook is not going to create a share price explosion."