UBS quarterly profit doubles, as CEO Ermotti bids farewell
Bank allows departing staff collect bonuses immediately as Covid-19 prompts career reviews
UBS posted a 99 per cent jump in third-quarter profit. Photograph: Arnd Wiegmann/Reuters
UBS on Tuesday posted a 99 per cent jump in third-quarter profit as heavy turnover in global markets helped the bank to a strong performance in investment banking and an unexpected rise in wealth management earnings.
In chief executive Sergio Ermotti’s last month at the helm, net profit for the world’s largest wealth manager climbed to $2.1 billion for July-September, handily beating expectations for $1.557 billion.
“Our third quarter results continue to demonstrate that our strategy is differentiating us,” Mr Ermotti, who will be replaced in November by former ING head Ralph Hamers, said in a statement.
“UBS has all the options open to write another successful chapter of its history under Ralph’s leadership.”
Investment banking saw earnings more than triple during the quarter thanks to a spike in trading and equity capital markets work which more than offset a fall for its advisory business.
Revenue in both its equities and foreign exchange, rates and credit units was up just over 40 per cent compared to a year earlier.
Asset management saw profits grow six times from a year ago. Despite a client shift into lower-margin funds which put pressure on recurring fees, wealth management posted an 18 per cent rise in pre-tax profit thanks to high levels of client transactions and $10 billion in net new loans. Analysts had expected earnings to fall in the bank’s core division.
UBS said it has so far accrued $1 billion for a cash dividend to be paid out next year, and has also set aside $1.5 billion in capital reserves for potential share repurchases.
UBS is also allowing employees to collect bonuses immediately after leaving the bank as the Covid-19 crisis prompts more workers to reconsider their careers. The Swiss wealth manager changed its rules on deferred compensation for former staff who exit the financial industry entirely.
Employees who have left the bank between 2015 and 2019 will also benefit from the change, chief financial officer Kirt Gardner said on a call with journalists. UBS paid out a total of $359 million in the third quarter to employees exiting across the bank, with $229 million going solely to those quitting the investment bank. – Reuters