Swiss bank UBS reported third-quarter net profit of $1.43 billion on Wednesday, surpassing analysts’ expectations of $667.5 million, according to LSEG’s poll. The strong earnings followed UBS’s initial client migration phase from Credit Suisse after the recent acquisition of the collapsed bank.
UBS’s third-quarter revenue reached $12.33 billion, beating estimates of $11.78 billion. The bank’s operating profit before tax was $1.93 billion, reversing a loss of $184 million in the same quarter last year. UBS reported a return on tangible equity of 7.3%, up from 5.9% in the previous quarter, and a CET 1 capital ratio of 14.3%, down from 14.9%.
The bank announced it intends to complete its $1 billion share buyback program in the fourth quarter and plans to continue repurchases into 2025.
“We started to see the benefits of our diversified business model and our global reach,” CEO Sergio Ermotti told CNBC.
UBS’s Investment Banking division reported a 36% increase in net income year-over-year, attributed to performance in equity derivatives, foreign exchange, and rate revenues. However, its Global Wealth Management branch posted a 6% decline in year-over-year revenue due to lower deposit margins and weaker loan revenues.
UBS returned to profitability in the first quarter of 2024 after reporting two quarterly losses linked to the acquisition of Credit Suisse. The bank has forecast $7 billion in cumulative savings by year-end, as part of a target of $13 billion in cost reductions by 2026.
The integration of Credit Suisse’s client and IT systems remains ongoing, with UBS aiming to complete the transition of Global Wealth Management client accounts in Singapore and Japan by the end of 2024.
Looking ahead, Ermotti noted that UBS faces challenges related to geopolitical volatility, interest rate trends, and U.S. competitors’ profit growth. In an interview with CNBC, Ermotti indicated that recent interest rate reductions would have limited impact on UBS, as 20% of its revenues are linked to net interest income.
“Lower rates in the foreseeable future will have some effect on profits, but it will be offset by transaction volumes and fee-based business,” Ermotti said, while acknowledging market volatility and upcoming U.S. elections as potential fourth-quarter influences.
UBS’s results follow Deutsche Bank’s strong earnings report last week and come amid third-quarter earnings announcements from other major European banks, including BNP Paribas and Santander.
