UBS logs highest quarterly profit in six years on fee bonanza from the wealthy

ZURICH, Oct 26 (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 payment earnings.

However Switzerland’s largest financial institution sounded a barely cautious notice for the approaching quarter, saying continued uncertainty surrounding financial restoration and up to date coverage adjustments in China might harm enterprise. It additionally famous consumer exercise ranges had been unusually excessive up to now quarter.

Its third-quarter web revenue of $2.279 billion simply surpassed a median estimate of a 24% stoop in revenue to $1.596 billion from a ballot of 23 analysts compiled by the financial institution.

UBS shares had been indicated up 2.2% in premarket commerce.

“Our enterprise momentum, our give attention to fueling progress, on disciplined execution and on delivering our full ecosystem to shoppers – all of this led to a different robust quarter throughout all of our enterprise divisions and areas,” Chief Government Ralph Hamers stated in a press release.

The financial institution’s flagship wealth administration enterprise noticed pre-tax revenue soar 43% on a 4% climb in earnings from transactions amongst its rich and ultra-wealthy shoppers in addition to a 15% rise in web curiosity earnings on increased lending ranges and margins.

The division noticed $18.8 billion in contemporary consumer 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% increased. Income in its equities buying and selling unit was up 3% to $1.36 billion, however its international alternate, 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 report wave of dealmaking exercise additionally bolstered outcomes for the likes of Goldman Sachs and JPMorgan .

It additionally follows double-digit p.c beneficial properties for web revenue in every of the previous 4 quarters as buoyant markets helped UBS generate increased earnings off of managing cash for the wealthy.

DIGITAL FLOURISH

CEO Hamers, who took the reins in November 2020 following a profitable tenure digitalising Dutch lender ING , stated he deliberate to current an up to date technique on Feb. 1.

That may embody new pushes into digital and hybrid banking, presentation slides confirmed.

UBS is making an attempt to enhance its digital providers to achieve extra clients exterior its tremendous wealthy core consumer base, whereas additionally saving on prices. It sees potential for a brand new on-line platform to drag in $30 billion within the subsequent yr after being launched in Might 2020, Reuters reported in June.

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

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

Reporting by Brenna Hughes Neghaiwi and Oliver Hirt; Enhancing by Michael Shields and Edwina Gibbs

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