UBS studies finest third quarter in decade with internet earnings up 99%


The logo of the Swiss banking giant UBS engraved on the wall can be seen on May 8, 2019 at the headquarters in Zurich.

Fabrice Coffrini | AFP | Getty Images

LONDON – The world's largest wealth manager, UBS, reported third-quarter net income on Tuesday, rising to $ 2.1 billion, slightly exceeding analysts' expectations. This corresponds to a jump of 99% compared to the same period last year.

"It is very difficult not to be satisfied with these numbers as they come from a large contribution from all business areas," CEO Sergio Ermotti told CNBC's Geoff Cutmore on Tuesday.

Analysts had expected that the Swiss bank and the asset manager will report a net profit of 1.5 billion US dollars for the third quarter, according to data from Refinitiv Eikon. That's the case after an 11% drop in earnings in the second quarter as the global banking industry felt the full impact of the coronavirus pandemic.

"We talk a lot about incentives and Covid-related matters, but the geopolitical uncertainties in Europe and also in Sino-US relations are still there and they are there to stay, so we shouldn't underestimate that." Ermotti added.

Third quarter earnings before tax increased 92% to $ 2.6 billion, according to UBS. This is the best result of the third quarter in ten years.

The results of the Swiss lender are the first European banks. Analysts expect a better quarter for the sector after a difficult first half prior to the coronavirus outbreak and economic crisis.

According to UBS, loan loss provisions for the period were $ 89 million, well below the amounts posted in the first and second quarters. The company also planned to distribute its late 2019 dividend this November and had earmarked $ 1.5 billion in share buybacks that are expected to begin next year.

Further highlights of the third quarter:

Operating profit was $ 8.9 billion compared to $ 7.08 billion a year ago. The capital ratio of CET 1 reached 13.9% compared to 13.1% in the previous year

UBS investment bank's pre-tax profit rose 268% due to market volatility resulting from the coronavirus crisis. While the wealth management division posted an 18% increase in pre-tax income and total invested assets hit an all-time high of $ 2.75 billion.

The bank attributed its results to continued strong customer activity and the "advantages of a well-diversified business model with a broad regional mix".

Speaking to CNBC, Ermotti said, "The visibility is very limited, but that hasn't really changed in the last few years and months. I think we're staying very agile and very focused on our plan."

From a geographic perspective, Ermotti also said that the US and Asia "always offer greater growth opportunities" than Europe, and that the latter need to carry out more structural reforms and regain competitiveness.

Tuesday's results are the last from UBS, led by Ermotti, who will be leaving the bank this month. Ralph Hamers will be the new director on November 1st.

"UBS has every opportunity to write another successful chapter in its history under Ralph's leadership," said Ermotti in a statement on the results.


Katherine Clark