UBS' third quarter results showed a SFr12.7bn ($8.7bn) surge in net new money on its private client side — the second largest quarterly increase in history — indicating its ability to gain market share despite adverse conditions. The massive increase suggests UBS has put together a winning formula in its private client division in contrast to many of its competitors, some of which are struggling to maintain market share.
The new money surge was mostly on the offshore private banking side, where international private clients invested a record SFr9.8bn during the quarter. The bank said the inflow was across all geographical regions, although Swiss clients showed a net outflow of SFr500m. UBS' onshore European wealth management initiative brought in SFr2.5bn of net new money, with particularly strong inflows reported in the UK and Germany, according to the bank.
"This result clearly reflects the strength of our client franchise despite difficult market conditions. In times like these, professional advice for clients is the key to success," a spokesman for UBS told Private Client Management.
Pre-tax profit for the private banking business was SFr644m, down 15 per cent from the second quarter of this year. "This number is less significant, fees will go up and down depending on market conditions. What's much more important is the strong inflow in new assets and this shows a very impressive increase," Christoph Ritschard, banking analyst at Zurcher Kantonal Bank in Zurich told Private Client Management.
Ritschard added that UBS was gaining market share in both Switzerland and the rest of Europe. "There is a definite flight to quality and this is benefiting UBS," he said.
No other private bank in Europe will come even remotely close to this number. Deutsche Bank's third quarter results showed net new money of only €1bn on the private client side; ABN AMRO's positive flow was €1.3bn. But the big comparison will be with Credit Suisse's, which reports its results on Thursday. Analysts say these are not expected to be anything like as strong as UBS' numbers.
UBS PaineWebber — the bank's private client business in the US — reported a pre-tax loss of SFr124m during the third quarter. Acquisition costs are still weighing heavily on Paine Webber's performance in the US; stripping these out of the business reveals a pre-tax profit of SFr161m. The strengthening of the Swiss franc against the dollar during the quarter also affected PaineWebber's results since they are all reported in Swiss francs.
Total invested assets were SFr597bn at the end of the quarter, a decline of eight per cent, compared with the second quarter. Net new money was SFr3.4bn, considerably higher than the second quarter results of SFr1.4bn.
UBS accompanied its third quarter results with the announcement that it intends to re-brand its current business groups under the UBS name. This signals the end of the PaineWebber and Warburg brands and UBS PaineWebber will become UBS Wealth Management.
"This is the end of an old strategy to re-brand all business lines under the UBS brand — it's a good move," Ritschard said.