UBS Reports $1.4 Billion Q3 Profit Amid Integration Challenges and Market Volatility
UBS posted a net profit of $1.4 billion in the third quarter, exceeding forecasts as the Swiss bank's trading unit profited from heightened
UBS posted a net profit of $1.4 billion in the third quarter, exceeding forecasts as the Swiss bank’s trading unit profited from heightened market volatility and cost cuts.
Profit for the quarter was nearly double analysts’ expectations, with sales increasing to $12.3 billion as the lender’s wealth management unit drew inflows. Diluted earnings per share for the bank came to $0.43, down from $1.29 a year ago, or a decrease of over 66%.
UBS' third-quarter profit almost double expectations https://t.co/rdjCAjKsfG pic.twitter.com/3Y5a9Lb7vc
— Reuters (@Reuters) October 30, 2024
Against a market backdrop that, while positive, still featured periods of high volatility and dislocation, our businesses delivered impressive revenue growth, said CEO Sergio Ermotti on Wednesday. He also added that the bank kept up strong client momentum, especially in the Americas and Asia-Pacific regions.
Wealth Management and Investment Banking Revenues Drive UBS’s Recovery Post-Credit Suisse Merger
Revenues at the lender’s major global wealth management sector rose slightly year on year to $6.2 billion, with lower income from interest rates offset by greater income from fees. Meanwhile, the investment bank’s revenues increased by 22% to $2.6 billion, boosted by good performance from its global markets division and higher trading volumes as a result of market volatility.
UBS returned to profitability in the first quarter of this year, following the rescue of crosstown rival Credit Suisse at the request of Swiss regulators.
The bank’s CET1 ratio, which compares core capital to risk-weighted assets and measures financial resilience, decreased to 14.3% as it phased out a regulatory adjustment connected to the Credit Suisse acquisition.
UBS Faces Integration Challenges and Regulatory Scrutiny
UBS still confronts the daunting task of integrating its IT system with that of Credit Suisse, as well as relocating clients – the latter transition expected to take approximately 18 months, according to Reuters earlier this month. The bank announced on Wednesday that it completed the migration of Global Wealth Management client accounts in Luxembourg and Hong Kong to UBS platforms in October and plans to move Global Wealth Management client accounts in Singapore and Japan by the end of the year.
Switzerland’s banking regulator Finma ordered UBS this month to strengthen its emergency and recovery preparations in light of the increased risks associated with the Credit Suisse merger.
Nonetheless, the UBS CEO emphasized that global markets will remain volatile in the fourth quarter.
The fourth-quarter view is certainly influenced by the uncertainty we see on the macroeconomic and geopolitical fronts, as well as the impending elections in the United States, which will undoubtedly be eventful, he stated.
The UBS numbers follow last Wednesday’s earnings beat by Germany’s top lender Deutsche Bank and join this week’s wave of third-quarter reports from European lenders, including BNP Paribas and Santander.
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