UBS's global wealth management reported higher profits in the third quarter, turning a corner after several quarters of lower revenue as the Swiss banking titan edges closer to completing its integration of collapsed competitor Credit Suisse.
Zurich-based UBS reported Oct. 30 that its wealth management group grew revenue by 2.7% to nearly $6 billion in the third quarter compared to the prior quarter, resulting in a 10% jump in underlying pre-tax profit to $1.3 billion during the same period.
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Third-quarter revenue was up more than 7% from a year ago largely due to higher recurring net fees and transaction-based income, which was slightly offset by an increase in financial advisor compensation. The wealth management group gained $25 billion in net new assets during the quarter, which it said puts it on track to hit its goal of approximately $100 billion in net new assets for 2024.
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"This shows that our wealth and asset management clients continue to value the capabilities we provide across our advice platform and the way in which we consistently innovate to meet their needs," UBS Group CEO Sergio Ermotti said during the earnings call.
Overall, UBS reported higher-than-expected operating profit before tax of $1.9 billion, up 31% from the previous quarter and a turn-around from a year earlier, when the firm reported a loss of $184 million following its Credit Suisse acquisition in June 2023.
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"There is no room for complacency. We are just about halfway to restoring pre-acquisition levels of profits and returns on capital," Ermotti said. "And the journey won't be a straight line."
Just before the earnings release, UBS Group AG Chairman Colm Kelleher was at an event in Oxford on Oct. 29, when he said UBS will eventually look to
UBS was cautious about the fourth-quarter result projections because of an expected "soft landing in the U.S. economy" as well as uncertainty with the U.S. presidential election and a "clouded" macroeconomic outlook, the Swiss bank said in the release.
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It estimates its global wealth management net interest income will decline in the mid-single digit in the fourth quarter, and that it will see a low single-digit drop in personal and corporate banking.
"In the short term, in addition to seasonality, ongoing global macroeconomic development, geopolitical conflicts and the upcoming U.S. elections create uncertainties that are likely to affect investor behavior," Ermotti said. "We continue to help clients navigate this environment and I remain confident in our ability to deliver on our financial targets as we position UBS for long-term sustainable growth and remain a pillar of economic support in the communities where we live and work."
