UBS reports its latest earnings
FABRICE COFFRINI | AFP | Getty Images
UBS on Tuesday reported a net income of $1.7 billion for the third quarter of this 12 months, barely above analyst expectations, with the Swiss bank citing a difficult environment.
Analysts had expected a net profit of $1.64 billion, based on Refinitiv data. UBS reported a net income of $2.3 billion a 12 months ago.
The Swiss lender had missed expectations within the last quarter when it posted a net profit of $2.108 billion. The bank said on the time the second quarter had been “one of the difficult periods for investors within the last 10 years” resulting from high inflation, the war in Ukraine and strict Covid-19 policies in Asia.
UBS said Tuesday these aspects continued to be in investors’ minds within the third quarter.
“The macroeconomic and geopolitical environment has turn into increasingly complex. Clients remain concerned about persistently high inflation, elevated energy prices, the war in Ukraine and residual effects of the pandemic,” Ralph Hamers, CEO of UBS, said in an announcement.
Chatting with CNBC’s Geoff Cutmore, Hamers said, nevertheless, that there have been very strong flows into the business over the quarter, with net recent fee-generating assets at $17 billion.
Other highlights for the quarter included:
- Revenues hit $8.3 billion, down from $9.1 billion a 12 months ago.
- Operating expenses dropped to $5.9 billion, from $6.2 billion a 12 months ago.
- CET 1 capital ratio, a measure of bank solvency, reached 14.4% versus 14.9% a 12 months ago.
Its investment banking division saw revenues down by 19% with the lower performance in equity derivatives, money equities, and financing revenue being offset by revenues in foreign exchange. The Global Wealth Management division also reported lower revenues, down by 4% year-on-year.
Nonetheless, Personal and Corporate Banking revenues rose over the identical period on more helpful rates from the Swiss National Bank.
Hamers noted Tuesday that clients on its wealth side were on the lookout for alternative investments and money, and he predicted that activity on the institutional side of its trading unit would remain weak within the fourth quarter.
China’s Xi
UBS is aiming to enhance its business in Asia-Pacific and CEO Hamers said he sees “some opportunities to grow” in China.
“The confirmation of [China President] Xi for one more term is on one side mainly the confirmation of consistency going forward, so among the policies that he has come out with over the past 12 months will almost definitely be continued,” Hamers said.
He added that the Swiss bank looks at China “by virtue of its demographics and among the dimensions of the economy.” “We expect over time it’s a really attractive place, so it’s a strategic place,” he added.
Elsewhere, Hamers expects a “difficult” time for Europe given the continued energy crisis and war in Ukraine.
“Europe may have a difficult period, a difficult winter although they’ve their reserves,” he said, adding that the Swiss bank expects the region to enter a recession.
Shares of UBS were up by greater than 4% in late morning European trade.
“We consider UBS’s Q3 results were reasonably good considering the difficult operating environment although net attributable profit was down 24% in comparison with the identical quarter the 12 months before,” Vitaline Yeterian, senior vice chairman at DBRS Morningstar, said via email.
