Financial Results

UBS's Third-Quarter Underlying Profits Dip, Reports Inflows

Tom Burroughes Group Editor London 7 November 2023

UBS's Third-Quarter Underlying Profits Dip, Reports Inflows

Among the result details, UBS said the acquired Credit Suisse wealth business logged net new money for the first time in more than a year.

The global wealth management arm of UBS logged profit before tax on an underlying basis of $1.119 billion for the three months ended 30 September, down from $1.234 billion a year earlier, the Zurich-listed group said today. 

The result was achieved on underlying revenues of $5.492 billion in Q3, versus $4.567 billion a year earlier in the wealth business. Total costs were $4.370 billion in the latest quarter, against $3.326 billion a year before. 

On a reported basis, total revenues rose 21 per cent to $5.810 billion, mainly due to the consolidation of Credit Suisse revenues. The increase was partly offset by a decrease, largely driven by lower other income. 

The rise in reported operating costs – 44 per cent – to $4.801 billion, was largely due to the consolidation of Credit Suisse expenses, integration-related expenses, unfavourable foreign currency effects, higher financial advisor variable compensation and an increase in technology expenses, the bank said in a statement today.

UBS said its wealth business’s cost/income ratio was 82.6 per cent and the underlying cost/income ratio was 79.6 per cent. 

Invested assets decreased 3 per cent from the previous quarter to $3.617 trillion, and it logged net new money of $22 billion. The gain was driven by the arrival of new clients, improved “share of wallet” and positive net new money in the Credit Suisse wealth business for the first time since the first quarter of 2022.

UBS’s acquisition of Credit Suisse in April this year, leaving Switzerland with one universal bank, continues to cause waves in the European and wider wealth and private banking sector. 

“We are executing on the integration of Credit Suisse at pace and have delivered underlying profitability for the group in the first full quarter since the acquisition. Our clients have continued to place their trust and confidence in us, contributing to strong inflows across wealth management and our Swiss franchise. We are optimistic about our future as we build an even stronger and safer version of the UBS that was called upon to stabilise the financial system in March and one that all of our key stakeholders can be proud of,” Sergio P Ermotti, Group CEO, said. 

The bank explained its wealth management client inflow in more detail.

“Our consistent dedication to clients continues to be rewarded by their confidence and trust in UBS. This was reflected in another quarter of strong flows. We have now stabilised Credit Suisse and continued to grow our franchise through new client acquisition and share of wallet gains, as well as the continued success of our client retention and win-back strategy,” it said. 

“Credit Suisse Wealth Management’s quarterly net new money has now turned positive for the first time in a year and a half, with $3 billion in the third quarter. UBS wealth management’s $18 billion in net new money is the second highest third quarter result in over a decade. Net new money was positive across all regions, with particular strength in APAC. Net new fee generating assets at UBS were also strong at $21 billion, representing a 6 per cent annualised growth rate,” it said.

At the group level, UBS said its underlying group costs of $9.6 billion fell around 5 per cent compared with estimated underlying operating costs expenses for the combined group for the second quarter of 2023. The bank said it “continued to execute our plans to reduce costs in non-core and legacy business, restructure Credit Suisse’s investment bank and remove duplication across operations.” UBS said underlying pre-tax profit was $844 million in Q3, against $2.042 billion a year before. On a reported basis, UBS logged a loss of $255 million, contrasting with a profit of $2.323 billion. A large year-on-year rise in reported operating costs – some of which were caused by the Credit Suisse acquisition – explained the change.

At the end of September, UBS had a Common Equity Tier 1 capital ratio – its “buffer” against shocks – of 14.4 per cent, and a liquidity coverage ratio of 196 per cent. 

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