UBS Wealth Management Americas reported strong profit growth even as its adviser headcount continued to tick down as a result of recruiting cutbacks.

Pretax profits for the unit soared 26% year-over-year, reaching $304 million from $242 million for the year-ago period, UBS reported on Friday.

The move to reduce hiring, launched by President Tom Naratil approximately a year ago, appears to be paying off. Compensation commitments with recruited advisers dropped 10%, sliding to $189 million from $209 million. And recruitment loans dropped to $2.754 billion from $3.234 billion, a 15% decline.

That reduction allows UBS to reallocate resources to its existing advisers, the company says.

Overall, the wealth management unit's revenue grew 11% to a record $2.1 billion. That growth outpaced a 9% rise in expenses, which climbed to $1.8 billion.

The firm's 6,915 advisers ― down 201 advisers from the year-ago period ― continue to lead the industry in terms of productivity. The average UBS adviser generates $1.23 million, according to the firm. Merrill Lynch, by contrast, reported average production of $1.04 million per adviser.

Like UBS, Merrill as well as Morgan Stanley announced cutbacks to recruiting efforts.

But that didn't stop Merrill Lynch from enticing away large UBS advisers ahead of a deadline to reduce hiring. For example, last month Merrill Lynch said it nabbed a UBS team that managed $1 billion in client assets.

Net new money at UBS declined for the second quarter; the firm reported outflows of $6.4 billion, compared to a net gain $1.9 billion for the prior quarter and $2.4 billion for the year-ago period. The company attributed the outflows to adviser attrition.

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