UBS earnings Q3 2022

UBS reports its latest earnings

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UBS on Tuesday reported net income of $1.7 billion for the third quarter of this year, slightly above analysts’ expectations, with the Swiss bank citing a challenging environment.

Analysts had expected a net profit of $1.64 billion, according to Refinitiv data. UBS reported net income of $2.3 billion a year earlier.

The Swiss lender had missed expectations in the last quarter when it posted a net profit of $2.108 billion. The bank said at the time the second quarter had been “one of the most challenging periods for investors in the last 10 years” due to high inflation, the war in Ukraine and strict Covid-19 policies in Asia.

UBS said on Tuesday that these factors continued to be on investors’ minds in the third quarter.

“The macroeconomic and geopolitical environment has become increasingly complex. Clients remain concerned about persistently high inflation, high energy prices, the war in Ukraine and the lingering effects of the pandemic,” UBS CEO Ralph Hamers said in a statement. .

Speaking to CNBC’s Geoff Cutmore, Hamers said, however, that there were very strong flows into the business during the quarter, with net new asset generating fees at $17 billion.

Other highlights for the quarter include:

  • Revenues totaled $8.3 billion, up from $9.1 billion a year earlier.
  • Operating expenses fell to $5.9 billion, from $6.2 billion a year earlier.
  • The CET 1 capital ratio, a measure of the bank’s solvency, reached 14.4% versus 14.9% a year ago.

Its investment banking division saw revenue decline 19% with lower performance in equity derivatives, cash equity and financing income offset by foreign currency income. The Global Wealth Management division also reported lower revenue, down 4% year over year.

However, personal and corporate banking income increased during the same period with more favorable rates from the Swiss National Bank.

Hamers noted on Tuesday that clients on its wealth side were looking for alternative investments and cash, and he predicted that activity on the institutional side of his business unit would remain weak in the fourth quarter.

Xi of China

UBS is aiming to improve its business in the Asia-Pacific, and CEO Hamers said he sees “some opportunity to grow” in China.

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“Confirmation of [China President] “Xi for another term is on the one hand confirmation of continued stability, so some of the policies that he has come up with over the past year are very likely to continue,” Hamers said.

He added that the Swiss bank looks at China “based on its demographics and some of the dimensions of the economy.” “We think that over time it is a very attractive place, so it is a strategic place”, he added.

Elsewhere, Hamers expects a “challenging” time for Europe given the ongoing energy crisis and the war in Ukraine.

“Europe will have a challenging period, a challenging winter even though they have their reserves,” he said, adding that the Swiss bank expects the region to enter recession.

UBS shares are down about 8% so far this year.

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