UBS fee bonanza brings quarterly profit to highest level in six years
- UBS posts net profit up 9% in third quarter, best quarter since 2015
- CEO Ralph Hamers plans to unveil his 2025 vision in February
- Bank aims to provide a new service to the wealthy in the United States
ZURICH, Oct.26 (Reuters) – UBS (UBSG.S) posted its highest quarterly profit since 2015 on Tuesday, as robust business activity by the world’s ultra-rich led to a 23% increase in commission income .
The surprisingly strong results follow double-digit percentage gains in net income in each of the past four quarters and come as Switzerland’s largest bank announced new plans for its digital push, including a new service de advice for affluent American clients.
Third-quarter net profit rose to $ 2.279 billion, well above the median estimate of a 24% collapse to $ 1.596 billion from a poll of 23 analysts compiled by the bank.
“We continue to perform well above the financial goals we have given you. And while we do, we continue to focus on growing from the top and the bottom,” CEO Ralph Hamers said during a call with analysts.
The bank’s flagship wealth management business posted its best pre-tax profit in its history, up 43% on a 4% increase in transaction income among its rich and ultra-rich clients as well as an increase 15% of net interest income due to increased lending. levels and margins.
The division recorded $ 18.8 billion in new inflows generating customer fees, while invested assets edged down from June to $ 3.18 trillion.
UBS’s investment bank posted a more stable performance, with revenues edging up 1%. Revenue from its equity trading unit rose 3% to $ 1.36 billion, but its foreign exchange, rate and credit arm saw its revenue decline 32% to $ 363 million.
Revenues from transaction and listing advice jumped 22% to $ 792 million, helped by exceptional M&A volumes.
The surprise profit follows a stellar quarter for US and UK banks which, encouraged by economic rebounds, freed up cash set aside for pandemic-related losses. A record wave of trading activity also boosted results for Goldman Sachs (GS.N) and JPMorgan (JPM.N).
UBS shares rose 1.4% in morning trading.
“The result marks another impressive quarter,” Citi analysts said in a note to clients, adding that UBS remains one of their top picks in banking and reiterating a buy rating on the stock.
He sounded a slightly cautious note for the coming quarter nonetheless, saying the lingering uncertainty surrounding the economic recovery and recent policy changes in China could hurt business. He also noted that customer activity levels had been unusually high during the last quarter.
CEO Hamers, who took the reins in November 2020 after a successful tenure at ING (INGA.AS) that made the Dutch lender more digital savvy, said he plans to present an updated strategy on February 1st.
This will include new thrusts in digital and hybrid banking.
UBS is trying to improve its digital services to reach more clients outside of its very rich client base, while reducing costs. He sees the potential for a new online platform to make $ 30 billion next year after launching in May 2020, Reuters reported in June. Read more
As part of her 2025 vision, she now wants to build a digitally scalable consulting model for affluent clients in the Americas, which includes the primary wealth market in the United States.
It also wants to expand its digital offerings in its home market, aiming to reduce its cost / income ratio to 55% in its Swiss activities, from 59% in the first nine months.
UBS derives most of its profits from advising and managing funds for the world’s rich, while maintaining smaller global investment banking and asset management operations. It operates its retail and corporate banking activities only in its home market.
This model has helped Switzerland’s largest lender exceed expectations since the outbreak of the coronavirus pandemic, as dynamic markets have helped it generate higher incomes through managing money for the rich.
Reporting by Brenna Hughes Neghaiwi and Oliver Hirt; Editing by Michael Shields and Edwina Gibbs
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