UBS posted a 15% gain in Q2 profit on lower costs, and said it settled a German tax investigation. Net income advanced to CHF 792m that compares with the CHF 719.3m median estimate of analysts surveyed by Bloomberg. Pre-tax profit came in at CHF 1.22bn (previous year: CHF 1.02bn) compared to a CHF 1.1bn consensus, despite higher provisions for legal disputes. Net-new money inflow in the wealth management unit was CHF 10.7bn, stronger than anticipated. The core capital ratio (Basel III) climbed to 13.5% at the end of June from 13.2% in March, fulfilling conditions for a dividend payout. Given a solid quarterly result, we confirm our rating. Nevertheless, insecurities remain at UBS, same as with other banks, on further potential litigation costs, particularly regarding a settlement in a probe of alleged manipulation of the currency markets. On a positive note, UBS was able to settle an investigation into whether it helped Germans evade taxes with German authorities, paying a fine of EUR 300m.