UBS reported its second quarter results this morning. Profits were weaker than expected and revenues across equity and debt capital markets were as woeful as elsewhere. Less usually, headcount was also down.
As we noted last week, job cuts in the second quarter are usually disguised by an influx of interns (while the third quarter is usually boosted by graduates). It's not clear how many interns UBS has hired this year, but in 2021 the bank brought on 1,700 interns, apprentices and graduates in total.
Despite the influx of students, UBS says its overall headcount fell by 403 people in the second quarter, to 71,294 in total. When the interns are taken out of the equation, the drop is likely to be more than 1,000.
It's not clear which area of the bank the jobs disappeared from - UBS stopped breaking out headcount by division a few years ago, but the investment bank could probably benefit from some trimming. While the cost income ratio across UBS as a whole fell to 70.6% in the second quarter, in the investment bank it rose to 81.8%, despite "lower variable compensation" (bonuses). In late March, UBS was said to be cutting jobs in ECM, but there have been further reports of job reductions there.
The chart below helps explain why. M&A revenues at UBS were down 30% on last year, more than any other bank to have reported so far, and there wasn't much respite from other investment banking revenue lines.
Will bigger cuts come next? UBS isn't saying, but unlike at Credit Suisse technology jobs at least should remain safe: the bank says it kept hiking spending on investment bank technology in the second quarter.
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