Swiss Bank UBS reports third-quarter results

UBS on Tuesday reported better-than-expected third-quarter earnings results, its best third quarter in a decade with a 99 percent jump in net profit.

The Swiss bank saw a net income of $2.1 billion, beating analysts’ expectations by far. According to data from Refinitiv Eikon, analysts estimated the bank and asset manager to report a net income of $1.5 billion for the third quarter. The estimates came after UBS reported an 11 percent drop in the second quarter due to the impact of the coronavirus on the global banking industry.

Here’s how UBS performed in the third quarter:

• Operating profit: $8.9 billion, vs $7.08 in 2019

• CET 1 capital ratio: 13.9%, vs 13.1% in 2019

“It is very difficult not to be happy with this set of numbers because they are coming from a great contribution from all business units,” CEO Sergio Ermotti told CNBC on Tuesday. “We speak a lot about stimulus and Covid-related matters, but the geopolitical uncertainties in Europe, and also in the Sino-U.S. relationship, (are) still there and they’re there to stay so we shouldn’t underestimate that.”

The finance firm also added that its pre-tax for the third quarter rose 92 percent to $2.6 billion, describing it as the best third-quarter result in the last ten years. It attributes its strong quarter’s performance to continuous and strong client activity, as well as the “benefits of a well-diversified business model with a broad regional mix.”

Based on geographical performance, Ermotti said the United States and Asia “offer bigger and greater growth opportunities” compared to Europe. Adding that the latter must undergo more structural reforms to regain competitiveness.

UBS is the first to release its quarter’s result in the European banking industry. Analysts expect this quarter to be better for Europe’s banking industry seeing that the first half of the year was quite rough due to the impact of the coronavirus on the economy.

The Swiss lender said loan loss provision for the quarter was at $89 million, by far lower than the amounts in the first and second quarters. The firm also said it plans to pay all delayed dividends from 2019 in November 2020 and has set aside $1.5 billion for share repurchases which will start from next year.

“The amount of visibility is very limited, but this has not changed in the last few years and months. I think what we are doing is staying very agile and staying very focused on our plan,” Ermotti added.

Tuesday’s report would be the last earnings results to be reported under the leadership of Ermotti. The CEO is set to leave the bank this month and will hand over to Ralph Hamers, who will become the next CEO on November 1. Ermotti in his statement said the Swiss bank “has all the options to write another successful chapter of its history under Ralph’s leadership.”