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UBS has reported net profit of $1.4bn for the third quarter, smashing expectations as the Swiss bank’s trading business benefited from increased market volatility and cost cutting.
Quarterly profit was almost double analysts’ forecasts on revenue that rose to $12.3bn as the lender’s wealth management business attracted inflows.
“Against a market backdrop that, while constructive, still exhibited periods of high volatility and dislocation, our businesses delivered impressive revenue growth,” chief executive Sergio Ermotti said on Wednesday, adding that the bank had “maintained strong client momentum”, particularly in the Americas and the Asia-Pacific region.
Revenue at the lender’s key global wealth management division was up slightly year on year to $6.2bn as lower income from interest rates was offset by higher income from fees. Investment bank revenue rose 22 per cent to $2.6bn, helped by strong performance from its global markets division assisted by higher trading volumes resulting from market volatility.
UBS said it had successfully completed the first wave of client account migrations in Luxembourg and Hong Kong, with Singapore and Japan expected to move over into its systems by the end of the year. Those will be a test case for the migration of Swiss accounts, a much larger cohort, in 2025.
Switzerland’s financial regulator Finma this month ordered UBS to bolster its emergency and recovery plans given the greater risks taken on with the acquisition of Credit Suisse.
The bank’s common equity tier one ratio, which compares its core capital with its risk-weighted assets and indicates its financial resilience, fell to 14.3 per cent as it phased out a regulatory adjustment related to its Credit Suisse takeover.
While UBS said it did not expect the $3.4bn decrease in CET1 capital to affect its share buyback plans of $1bn by the end of the year, Citigroup analyst Andrew Coombs pointed out that “there is now slightly less flexibility on buybacks for 2025”. He said it was “overall a solid set of results across the core divisions”.
UBS shares rose 2.3 per cent in early trading on Wednesday.
