UBS profit was up 32% to CHF1.24bn for the third quarter of 2018. Compared to the previous year, the group’s adjusted pre-tax profit increased 15% to CHF1.73bn while reported pre-tax profit jumped 37% to CHF1.67bn.
The group’s operating income was CHF7.28bn, up 2% from CHF7.14bn a year ago. Total operating expenses dropped 5% year-on-year to CHF5.61bn.
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UBS’ CET1 capital ratio and CET1 leverage ratio were 13.5% and 3.8%, respectively, at the end of September 2018.
Wealth management lags
The surging profits, boosted by the UBS investment bank, mask a fall in profits from its wealth management business.
The group’s global wealth management business posted adjusted pre-tax profit of CHF1bn for the third quarter of 2018, down 4% from the previous year. Net new money was CHF13.5bn.
This was expected: In September, UBS CEO, Sergio Ermotti warned over declining transactions revenues in the wealth management business. July saw multiple layoffs in its wealth management division.
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By GlobalDataIn a statement, UBS suggested growth might flatline in the fourth quarter of 2018.
“Ongoing geopolitical tensions, rising protectionism and trade disputes have further dampened investor sentiment and confidence”, the bank said. “We expect these latter trends to continue to impact Global Wealth Management clients’ transaction activity in the fourth quarter.”
However, the bank reaffirmed its plan to deliver 10-15% pre-tax profit growth over the cycle in its global wealth management business by focusing on the Americas.
“Expansion in the American ultra-high net worth segment alone is expected to contribute significant net new money over the next three years”, a statement said.
Technology and regulation continue to be costly
On a year-on-year basis, the unit’s adjusted operating expenses increased 4% to CHF3.04bn.
The bank attributed the rise to technology and regulatory investments in technology and regulatory-related expenses.
In August, UBS closed Smartwealth, its its digital wealth management platform in the UK.
The division’s adjusted operating income rose 2% to CHF4.04bn from CHF3.96bn a year earlier.
Adjusted profit before tax at the group’s asset management business fell 16% to CHF129m from CHF153m last year. Net new money excluding money market flows was “marginally positive”.
The unit’s adjusted operating income dipped 9% to CHF449m from CHF494m last year, while adjusted operating expenses dropped 5% due to lower personnel expenses.
