UBS Group AG posted a surprise jump in profit as wealth management fees soared the most in almost three years and the firm followed Wall Street rivals in seizing on the deal boom.
The Zurich-based bank topped expectations on most key metrics, including investment banking pretax profit, which was almost double what analysts had predicted.
At the key wealth management business, surging client activity led to a 23 percent increase in recurring fee income and almost US$19 billion of net new fee-generating assets.
Photo: AFP
“The market and economic backdrop were broadly positive in the third quarter, although there has been some uncertainty recently,” UBS chief executive officer Ralph Hamers said in a statement, referring to a global debate about inflation, volatile markets and the China Evergrande Group (恆大集團) crisis.
While the third quarter was marked by “unusually high levels” of client activity, UBS warned that there might be a slowdown this quarter.
The bank also signaled that persistent economic, social and geopolitical tensions are raising questions about the sustainability of the economic recovery from the COVID-19 pandemic.
Hamers — who joined UBS from ING Groep NV where he pushed the Dutch bank’s innovation — wants to use artificial intelligence to improve services and rethink what markets the bank operates in, with a focus on investing more in the Asia-Pacific and Americas regions.
In a Bloomberg TV interview, Hamers said that he is planning a digital bank in the US.
In the third quarter, the bank’s pretax profit was US$2.9 billion, compared with estimates of US$2.09 billion, while net income reached US$2.2 billion, compared with estimates of US$1.55 billion.
UBS, whose earnings are sensitive to US dollar rates, is facing a potential tailwind for future quarters as talk of increasing rates continues to build.
A 100 basis-point increase in yield curves would boost the bank’s net interest income by US$1.5 billion in its wealth and Swiss business, previous UBS financial statements have said.
Higher rates would be a welcome relief for the bank, which has had to contend with negative interest rates in its home country for years, a factor that was exacerbated when rates decreased around the world.
The bank is still fighting a US$4.5 billion penalty in France.
A delayed French court decision to December has moved any related litigation costs into the fourth-quarter results.
Hamers himself is still the subject of a Dutch probe into his role in a money-laundering case at ING.
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