UBS profit beats expectations but warns of problems ahead

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UBS, the Swiss bank, beat expectations Friday with a second-quarter net profit of 1.03 billion Swiss francs ($1.05 billion), higher than the 680 million Swiss francs forecast by analysts.

However, the Swiss lender warned that volatility, uncertainty and geopolitical tensions were causing client "risk aversion" and depressing transaction volume, and that this was unlikely to change soon - echoing the other major European banks which have reported earnings this week.Profits are being dented by low or negative interest rates, and wealthy clients cutting their number of transactions as they are unwilling to take risks in choppy markets.

The bank's profits were down from 1.2 billion Swiss francs in the same period in 2015, when market conditions were much more favorable.

UBS's Swiss rival Credit Suisse reported a surprise profit for the second quarter of 2016 on Thursday.

Meanwhile, UBS may be on the verge of a rescue attempt for Monte dei Paschi di Siena, the struggling Italian bank. Italy's third-biggest lender, said in a statement on Thursday that it has received a last-minute rescue proposal from UBS, within hours of an expected bailout.

Monte dei Paschi di Siena, like many Italian banks, has been struggling with a high level of non-performing loans (NPLs) or bad debts.

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