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UBS wealth management business posts best pre-tax profit ever

posted onOctober 26, 2021

Swiss banking giant UBS reported Tuesday (Oct. 26) higher profit in its third quarter with the bank's wealth management division providing a significant boost to its results once again. 

Net profit attributable to shareholders was $2.28 billion, up 9%  from last year's $2.01 billion and marks the best quarterly results in six years. Earnings per share were $0.63, higher than $0.55 a year ago. 

"The market and economic backdrop were broadly positive in the third quarter; although there has been some uncertainty recently” UBS CEO Ralph Hamers said in a statement. Separately Hamers, who took the reins in the Zurich-based banking group in November 2020, told CNBC:

“We are getting more clients, clients are looking for alternative investments — we have been able to support them through the ecosystem of opportunities.” 

Global Wealth Management's  profit before tax increased 43% y-o-y to $1.5 billion while invested assets rose to $3.2 trillion. The division's operating income increased by 17% and net interest income grew 15%, on higher loan revenues from higher volumes and margins, as well as higher deposit revenues.  Transaction-based income rose 4%, mainly driven by high levels of client activity in the Americas, EMEA and Switzerland. 

UBS global wealth management

(Source: UBS)

Meanwhile, net credit loss releases were $11m, compared with net credit loss releases of $22m in 3Q20. The cost/income ratio improved to 69.8%, down 5.8 percentage points YoY, as income increased by 17% and operating expenses increased by 8% driven by financial advisor variable compensation. 

Loans increased to $231bn, with $3bn of net new loans, driven by the Americas. Invested assets decreased by 1% sequentially to $3,198bn. Fee-generating assets were slightly down sequentially to $1,412bn. Net new fee-generating assets were $18.8bn, supported by inflows in nearly all regions, and represented an annualized growth rate of 5% in the quarter, the investment banking company  said referring to its Global Wealth Management division.

Other highlights for the third quarter: 

PBT was $2,865m (up 11% YoY), including net credit loss releases of $14m. The cost/income ratio was 68.7%, 1.7 percentage points lower YoY. Operating income increased by 2% YoY, while operating expenses decreased by 1%. Return on CET1 capital was 20.8%. The quarter-end CET1 capital ratio, a measure of bank solvency, was 14.9% (guidance: ~13%) and the CET1 leverage ratio was 4.31% (guidance: >3.7%), both up QoQ.

Further, the company said it repurchased $2.0bn of shares in 9M21 and intends to repurchase up to $0.6 billion of shares during the fourth quarter. 

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