Tuesday 20 October 2020 10:47 am

UBS profit soars 99 per cent on trading boom

UBS reaped the benefits of the rebound in global markets in the third quarter, with its investment banking arm helping the overall business achieve a 99 per cent jump in profit.

The Swiss lender’s wealth management arm – which has been a focus of departing chief executive Sergio Ermotti – also expanded despite the coronavirus pandemic.

The third-quarter results are a high note for Ermotti to end on after nine years at the helm. He hands over to former ING boss Ralph Hamers next month.

It comes after the big US banks posted a mixed set of quarterly earnings. The jump in market activity helped those focused on investment banking. But retail-focused lenders continued to suffer during the Covid downturn.

UBS’s net profit came in at $2.1bn (£1.62bn) in the three months ended September, the lender said in its latest financial statement today. It was up 99 per cent year on year and solidly beat expectations of $1.56bn.

Diluted earnings per share rose 101 per cent year on year to $0.56, from $0.28 a year earlier.

Profit before tax at the lender’s investment banking arm soared 268 per cent year on year, hitting $632m. 

Within that, global markets revenue jumped 42 per cent. It benefitted from the sale of intellectual property rights concerning indexes. But also from “higher client activity levels, resulting from market volatility, notably within equity derivatives, credit, FX and cash equities”.

“Our third quarter results continue to demonstrate that our strategy is differentiating us as we continuously adapt and accelerate the pace of change,” Ermotti said.

“UBS has all the options open to write another successful chapter of its history under Ralph’s leadership.”

Global wealth management’s profit before tax rose 18 per cent year on year to $1.06m. High levels of client activity helped operating income grow three per cent. Meanwhile, greater market volatility led to a 16 per cent improvement in transaction-based income.

The bank’s tier one capital ratio was 13.5 per cent in the third quarter of the year. It made a 21.9 per cent return on CET1 capital.

UBS said it had accrued $1bn for a cash dividend to be paid next year. It said the second installment of the 2019 dividend of $0.37 per share is to be paid out in November. The bank has also set aside $1.5bn for potential share repurchases.