UBS wealth management division helps profits soar to $2.3bn

·2-min read
This photograph taken on March 3, 2021 in Zurich shows a sign of Swiss banking giant UBS on their headquarters. (Photo by Fabrice COFFRINI / AFP) (Photo by FABRICE COFFRINI/AFP via Getty Images)
The Swiss bank revealed that its wealth management saw invested assets rise to $3.2trn, with the division making a record $1.5bn pre-tax profit, a rise of 43%. Photo: Fabrice Coffrini/AFP via Getty Images

Profits at UBS (UBSG.S) beat analyst expectations in the third quarter, soaring to $2.3bn (£1.7bn) thanks to strong performance at its wealth management division.

The rise marked a 9% increase when compared to the same period last year, and was up from $2bn in the second quarter. It was the company’s best quarter since 2015.

According to estimates collected by Refinitiv, analysts had expected the figure to come in at $1.57bn.

The Swiss bank revealed that its wealth management saw invested assets rise to $3.2trn, with the division making a record $1.5bn pre-tax profit, a rise of 43%. The division saw $18.8bn in fresh client fee-generating inflows.

Operating income also stood at $9.1bn, compared to $9bn in the previous quarter, while return on equity, a measure of financial performance, was 15.3%, up from 13.7% the previous three months.

Switzerland’s largest bank also announced new plans for its digital drive on Tuesday, including a new advisory service for wealthy clients in the US.

Shares in UBS rose on the back of the strong trading update. Chart: Yahoo Finance
Shares in UBS rose on the back of the strong trading update. Chart: Yahoo Finance

"Regardless of the backdrop, we have continued and will continue to provide our clients with valuable advice and quality execution, enabling them to navigate volatility and capture opportunities," said chief executive Ralph Hamers, who took the reins in November 2020.

A rise of mergers and acquisitions, and stock market listings across the globe, also generated strong income for UBS. Revenues from advising on deals rose 22% to $792m over the period.

In its second quarter, the bank reported a 63% rise in earnings on the back of strong markets and a boom in mergers and acquisitions.

Shares in UBS were 1.7% higher on the day as it said earnings per share (EPS) growth would exceed its 30% estimate for the quarter.

Read more: HSBC announces $2bn share buyback as profit surges 74%

Mark Haefele, chief investment officer, said: “This week almost 50% of the S&P 500 market cap will report. We maintain our S&P 500 EPS growth estimate of 45% this year and 10% next year.

“Our June and December 2022 S&P 500 price targets remain unchanged at 4,800 and 5,000, respectively. Solid profit growth is a pillar of our outlook.”

In a note to clients, Citi analysts said that the strong trading update “marks another impressive quarter", adding that UBS remained one of their top picks in the banking sector and reiterating a buy rating on the stock.

Watch: UBS's Hamers on Earnings, Risk-Off' Sentiment: Full Interview

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