UBS Group AG UBS 0.57% said fees from wealthy clients soared in the third quarter and its investment bank also reaped more revenue.
The Swiss bank said its third-quarter net profit rose 9% to $2.28 billion from $2.09 billion a year earlier. Analysts expected a net profit of about $1.6 billion. UBS said client activity was unusually high in the quarter and it expects it to slow down in the final three months of the year.
UBS’s wealth management arm reported a 43% rise in operating profit and a 23% increase in recurring net fee income. The bank said it attracted $18.8 billion in new net fee generating assets in the quarter and $80 billion for the nine months to Sept. 30.
Profit for UBS’s investment bank rose 32% in the quarter. Most of the growth was in global banking, which advises companies on stock and bond deals as well as mergers and acquisitions. Big banks in Europe and the U.S. have reported booming earnings from securities trading and corporate deal making.
UBS is Switzerland’s largest bank by assets. It caters to the world’s rich as a wealth manager that can connect clients to trading markets and deals flowing through its investment bank.
That business model, the result of a restructuring a decade ago that de-emphasized riskier Wall Street businesses and refocused the firm as an elite private bank, paid off during the Covid-19 pandemic, when wealthy clients grew wealthier as financial markets boomed. UBS also avoided taking large loan loss provisions, since most of its lending is to Swiss households and companies, or to the very rich.
Credit losses in the quarter were $14 million.
On Tuesday, Chief Executive Ralph Hamers said market conditions have become more uncertain in the fourth quarter. He is expected to give a strategy update on Feb. 1.
Mr. Hamers has said he wants UBS to modernize how it interacts with customers and shed its bureaucratic image. He recently launched an artificial intelligence, data and analytics hub to promote more automation and client-matching to products.
He also introduced small work teams called pods that he says can help cut through red tape at the bank. Mr. Hamers was hired from ING Groep NV last year after helping that bank automate and scale up with online customers.
In December, a French court is to decide on an appeal by UBS of a 2019 verdict that found it helped French customers evade taxes and imposed about $5 billion in penalties. The yearslong legal battle stemmed from visits to France by Switzerland-based UBS bankers to take clients to tennis matches and other events.
UBS also was one of the hardest hit banks when family office Archegos Capital Management defaulted on large derivatives transactions earlier this year. UBS’s investment bank lost about $861 million exiting Archegos trades, of around $10 billion lost by banks that lent to Archegos. Its smaller Swiss rival, Credit Suisse Group AG , lost $5.5 billion.
Corrections & Amplifications
UBS’s wealth management arm reported a 43% rise in operating profit and a 23% increase in recurring net fee income. An earlier version of this article said operating profit rose 17%. Also, profit for UBS’s investment bank rose 32% in the quarter. An earlier version of this article said profit rose 11%. (10/26)
Write to Margot Patrick at [email protected]
Copyright ©2021 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
