UBS fee bonanza lifts quarterly profit to six-year high By Reuters

© Reuters. FILE PHOTO: The emblem of Swiss financial institution UBS is seen in Zurich, Switzerland October 25, 2018. REUTERS/Arnd Wiegmann

By Brenna Hughes Neghaiwi

ZURICH (Reuters) -UBS posted its highest quarterly revenue since 2015 on Tuesday, as strong buying and selling exercise by the world’s extremely rich led to a 23% surge in charge earnings.

The surprisingly sturdy outcomes observe double-digit p.c beneficial properties for internet revenue in every of the previous 4 quarters and are available as Switzerland’s largest financial institution introduced new plans for its digital push together with a brand new advisory service for prosperous U.S. purchasers.

Third-quarter internet revenue got here in at $2.279 billion, simply surpassing a median estimate of a 24% hunch to $1.596 billion from a ballot of 23 analysts compiled by the financial institution.

“We proceed to carry out properly above the monetary targets that we’ve given you. And whereas we do this, we proceed to be targeted on driving progress on the highest and the underside line,” Chief Govt Ralph Hamers mentioned on a name with analysts.

The financial institution’s flagship wealth administration enterprise posted its greatest pre-tax revenue ever, hovering 43% on a 4% climb in earnings from transactions amongst its rich and ultra-wealthy purchasers in addition to a 15% rise in internet curiosity earnings on account of larger lending ranges and margins.

The division noticed $18.8 billion in contemporary shopper fee-generating inflows, whereas invested property fell barely from June to $3.198 trillion.

UBS’s funding financial institution posted a steadier efficiency, with income edging 1% larger. Income in its equities buying and selling unit was up 3% to $1.36 billion, however its overseas trade, charges and credit score arm posted a 32% drop in turnover to $363 million.

Income from advising on offers and listings jumped 22% to $792 million, helped by bumper M&A volumes.

The shock revenue comes on the heels of a stellar quarter for U.S. and British banks which, inspired by financial rebounds, launched money put aside for pandemic losses. A file wave of dealmaking exercise additionally bolstered outcomes for the likes of Goldman Sachs (NYSE:) and JPMorgan (NYSE:).

UBS shares had been 1.4% larger in morning commerce.

“The consequence marks one other spectacular quarter,” Citi analysts mentioned in a notice to purchasers, including that UBS remained one in all their high picks within the banking sector and reiterating a purchase ranking on the inventory.

It nonetheless sounded a barely cautious notice for the approaching quarter, saying continued uncertainty surrounding financial restoration and up to date coverage modifications in China may harm enterprise. It additionally famous shopper exercise ranges had been unusually excessive up to now quarter.


CEO Hamers, who took the reins in November 2020 following a profitable tenure at ING that made the Dutch lender extra digitally savvy, mentioned he deliberate to current an up to date technique on Feb. 1.

That may embody new pushes into digital and hybrid banking.

UBS is attempting to enhance its digital companies to succeed in extra prospects exterior its tremendous wealthy core shopper base, whereas additionally saving on prices. It sees potential for a brand new on-line platform to drag in $30 billion within the subsequent 12 months after being launched in Might 2020, Reuters reported in June.

As a part of its 2025 imaginative and prescient, it now desires to construct a digitally scalable recommendation mannequin for prosperous purchasers within the Americas, which incorporates the core wealth market of america.

It additionally desires to increase its digital choices in its house market, aiming to convey its price/earnings ratio right down to 55% in its Swiss enterprise from 59% within the first 9 months.

UBS derives the most important chunk of its income from advising and managing cash for the world’s wealthy, whereas additionally sustaining smaller international funding banking and asset administration operations. It conducts retail and company banking solely in its house market.

That mannequin has helped Switzerland’s largest lender exceed expectations because the outbreak of the coronavirus pandemic, as buoyant markets helped it generate larger earnings off of managing cash for the wealthy.

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