The Swiss UBS is the first major European bank to open its balance sheet and surprises with solid quarterly figures. The rich and super-rich in particular are increasingly parking their money with the institute, which is also benefiting from the crisis at rival Credit Suisse.
UBS has picked up speed again in its core business with millionaires and billionaires. After a dip in the second quarter, the rich and super-rich once again brought more money to the major Swiss bank in the summer. The solid balance sheet attracted customers in an environment characterized by economic and political turmoil. But the turbulence on the financial markets also left its mark on UBS, because many customers were trading fewer securities. Accordingly, the group’s profits fell in the third quarter by 24 percent to $ 1.73 billion.
“I’ve spent a lot of time with customers from all over the world and their feedback has been very consistent,” said CEO Ralph Hamers. They are concerned about inflation, energy prices, the war in Ukraine, the aftermath of the pandemic, the slowing economy and interest rate hikes. This affects investor sentiment. “And we expect that to remain so at least until the end of the year.”
Nevertheless, Hamers reaffirmed the goals and held out the prospect of further share buybacks. While professional customers continued to trade foreign exchange and bonds vigorously, many private customers kept their feet still. “Individual investors are generally staying on the sidelines, waiting for signs of improvement,” Hamers said.
At the same time, however, the bank attracted additional money from existing and new customers, especially from Asia. Net inflow of fee-generating assets climbed to $17.1 billion. Extrapolated for the year, this corresponds to a growth rate of around five percent. The bank is aiming for an annual increase of more than five percent over the cycle. It appears that UBS benefited from rival Credit Suisse’s crisis in the third quarter and is likely to do so in the fourth quarter, analysts at JP Morgan said.
CEO Hamers also confirmed that UBS had taken over business from a number of competitors. He also forecast new money inflows for the fourth quarter. With a view to the third quarter, the experts at Luzerner Kantonalbank also highlighted the positive inflow of new money. The bottom line is that the bank did better than expected. “UBS delivered a pleasing result in a difficult environment,” said analyst Daniel Bosshard. Compared to many a competitor, UBS is in calm waters. The shares of the Zurich institute rose by 4.2 percent.
The bank finished the quarter better than analysts had expected, even though it made less than a year ago in all four divisions. The decline was most notable in investment banking, where pre-tax profit fell 47 percent. There was a lull in business with merger consulting and capital market transactions in particular. The big Wall Street houses also suffered a slump in profits for the third quarter due to falling investment banking commissions and higher provisions. UBS was one of the first major European banks to present the interim report. Deutsche Bank follows on Wednesday, Credit Suisse on Thursday.
