UBS beats analyst expectations despite profit slide

UBS Group described a “good” third quarter in a “challenging” environment on Tuesday, with profit before tax falling 19% year-on-year to $2.32bn.

It did, however, beat consensus expectations on revenue by 2.09%, and in earnings per share by 29.03%.

The Swiss banking giant said diluted earnings per share totalled 52 US cents for the three months ended 30 September, down from 63 cents in the same period last year.

Its return on CET1 capital was in line with targets at 15.5%, as was its cost-to-income ratio at 71.8%, while its CET1 capital ratio was 14.4%, just above its guidance for around 13%.

“The macroeconomic and geopolitical environment has become increasingly complex,” said chief executive officer Ralph Hamers.

“Clients remain concerned about persistently high inflation, elevated energy prices, the war in Ukraine and residual effects of the pandemic.

“In Switzerland, many of our retail and small business clients will also be impacted by disruptions across the rest of Europe, and we are focused on supporting them through the energy crisis.”

Hamers said the impact of that had been far-reaching, affecting asset levels, market volatility, rates and investor sentiment across the globe, and with the uncertainty clients were seeking advice and solutions.

“They entrusted us with $17bn of net new fee-generating assets in Global Wealth

Management and $18bn of net new money in Asset Management.

“We continue to execute our strategy across all our key regions.

“In the US, we’re driving scale and productivity, improving profit before tax margins and positioning our business for future growth, all supported by strong advisor hiring.”

In the Asia-Pacific region, UBS saw “strong growth opportunities”, and took steps to expand its Global Family and Institutional Wealth business in southeast Asia, Ralph Hamers explained.

“In Switzerland, the stability of our business is underpinned by continued solid

Growth.

“And in EMEA, we further optimised our footprint to drive efficiency and focus on growth.

“For the quarter, we delivered good financial performance, with higher net interest income partly offsetting the impact of lower market levels and client activity.”

The chief executive said the company remained “disciplined” on risk management and cost efficiency as it headed into the fourth quarter.

“With limited credit risk, a balance sheet for all seasons and a highly capital generative model, we remain confident in our ability to deliver attractive and sustainable capital returns to shareholders.”

At 1146 CEST (1046 BST), shares in UBS Group were up 4.23% in Zurich at CHF 15.77.

Reporting by Josh White at Sharecast.com.