UBS reveals 2021 third-quarter profits rise to 6-year high
Wealth management division bolsters Swiss bank’s Q3 results
UBS reported a 9% year-on-year rise in net profit for the third quarter of 2021 on Tuesday, a six-year high bolstered by booming wealth management fees.
The bank’s net profit attributable to shareholders stood almost $300m higher than the previous quarter at $2.28bn (£1.65bn). This comfortably exceeded the $1.57bn predicted by analysts polled by Refinitiv.
The wealth management division of Switzerland’s largest bank reported its best pre-tax profit on record, rising 43% to $1.5bn. Income from transactions among its high-net-worth and ultra-high-net-worth clients rose by 4%, while higher lending levels and margins prompted a 15% rise in net interest income.
Although new client fee-generating inflow amounted to $18.8bn, the firm’s invested assets suffered a marginal dip from the previous quarter to just under $3.2trn.
In a call with analysts reported by Bloomberg, CFO Kirt Gardner admitted that UBS’ wealth management clients in China are deleveraging and becoming more cautious.
The chances of the Chinese real estate giant Evergrande Group experiencing a default have receded substantially in recent days with the settlement of a an overdue bond interest payment.
However, wider anxiety as to the strength and durability of Asia’s post-Covid-19 recovery remains.
Striking a positive note, Gardner maintained: “Asia always recovers faster than expectations and we’ll see that going forward.”
M&A and crypto
Like its Wall Street rivals, UBS enjoyed a strong quarter of merger and acquisition activity. Indeed, at $792m, revenue from advising on deals and listings stood 22% higher than in the third quarter of 2020.
Discussing the results on a call with analysts, CEO Ralph Hamers stated: “We continue to perform well above the financial targets that we have given you. And while we do that, we continue to be focused on driving growth on the top and the bottom line.”
When asked as to whether the wealth management giant will look again at cryptocurrencies less than a week after bitcoin hit a new all-time high, Hamers said: “At this moment, we stay on the sidelines there. We feel that the market hasn’t really come to a point where people truly understand the underlying factors that influence the value of some of these cryptocurrencies.”
By 15:00 BST (UTC +1), UBS traded up 0.5% at CHF16.46, up 29% since the start of the year.