Switzerland’s largest bank reports strong transactional activity in its core business and expects to achieve its objective of $100 billion in net new assets by the end of the year.
UBS is turning the upheavals and drama of 2023, and its fraught government-prompted takeover of Credit Suisse, into a dim national memory receding in the rearview mirror of Swiss business history.
In its third-quarter ad hoc announcement released on Wednesday, the bank reported an underlying pre-tax profit of $2.4 billion, which it said was an ample indication of the strength of its client franchises.
Overall, group revenues were up 5 percent year-on-year but gained 9 percent on an underlying basis, with the aforementioned transactional activity recurring fee income more than offsetting the expected headwinds impacting net interest income after key central banks started cutting interest rates in the quarter.
Invested assets were up 15 percent at $6.2 trillion as it experienced «continued client momentum» with $25 billion in net new assets in its core global wealth management business, putting it on «on track» to deliver its ambition of bringing in $100 billion in net new assets for the whole of 2024.
Overall, the market environment remained constructive in the third quarter but also showed «signs of dislocation and volatility».
UBS generated $15 billion in net new fee-generating assets and saw strong discretionary mandate sales in all regions despite continued pricing discipline.
It also recorded strong transactional activity in global wealth management and the investment bank, with the former’s revenues up almost a fifth (19 percent) with the latter gaining by practically a third (31 percent).
The high levels of transactional activity came from both private and institutional clients, with global wealth management seeing strong momentum in all regions led by the Americans and the Asia Pacific (APAC).
In its investment bank, the global markets business saw gains also coming from all regions, but «particularly» in the Americas. The global banking business experienced strong M&A performances in Asia and the US. In UBS’s Swiss home market, it granted or renewed around 35 billion francs in loans.
Beyond that, it indicated that many facets of its integration with Credit Suisse, the country’s erstwhile second-largest bank, remained on track. It completed the first wave of client migrations in Luxembourg and Hong Kong this month. Singapore and Japan are expected to be finalized by the end of the year, with Switzerland up in 2025.
It is on target to reach the expected $7.5 billion in cost cuts this year after it managed to realize an additional $800 million in savings in the third quarter, with a further $5 billion in risk-weighted asset reductions in non-core and legacy ahead of plans.
As a result, it expects to be in a position to save about $13 billion (gross) by the end of 2026.
It also maintained that it would complete $1 billion in share repurchases in the fourth quarter and it intends to keep making them in 2025 although that will depend on the country’s review of its capital regime requirements.
It also announced several AI initiatives to benefit clients and employees, including a new proprietary AI assistant for 20,000 employees in Switzerland, Hong Kong, and Singapore with «easy» access to product information and investment research.
In the investment bank, it is piloting a proprietary AI algorithm that researches and compiles M&A buy-side targets.
UBS indicated that it expects a continuation of the current market trends in the fourth quarter given expectations for a soft landing in the US economy despite macroeconomic conditions remaining clouded elsewhere in the world.
In the fourth quarter, we anticipate a mid-single digit decline in net interest income in Global Wealth Management and a low single-digit decline in Personal & Corporate Banking. Non-core and legacy is expected to generate a quarterly pre-tax loss in line with our earlier guidance, the bank indicated.
