UBS AG, Switzerland's largest bank, reported an increase in second-quarter profit and said it is close to a settlement over US mortgage-backed bond sales. UBS rose in Zurich trading after posting net income of about 690 million Swiss francs (€559 million).

Profit climbed from 524 million francs a year ago. UBS attracted about 12.8 billion francs in net new funds to its wealth management units and increased its capital buffer, the bank said.

The bank reached an agreement in principle with the US Federal Housing Finance Agency to settle claims related to residential mortgage-backed securities offerings between 2004 and 2007, UBS said, without disclosing the cost of the settlement. The company is booking about 865 million francs (€700 million) of pretax charges, provisions and writedowns in the quarter related to the settlement and a Swiss-UK tax agreement.

UBS's operating profit before tax in the quarter amounted to about 1.02 billion francs and its common equity ratio under fully-applied Basel III rules rose to about 11.2 per cent from 10.1 per cent at the end of March. The bank will publish full quarterly results on July 30th.
– (Bloomberg)