By Pietro Lombardi 
 

UBS Group AG has set aside capital reserve of $1.5 billion for buying back its shares after a strong performance of its investment-bank and wealth-management operations, as well as gains from the sale of a business, fueled a sharp increase in quarterly profits, which almost doubled.

This is the final set of results under Chief Executive Sergio Ermotti, who is leaving the bank after nine years at the helm. Mr. Ermotti has steered the banking giant through a significant restructuring, under which it streamlined its investment bank operations while shifting its business toward managing money for rich clients.

UBS, the world's largest wealth manager by assets, said Tuesday that it expects to be allowed to start buying back shares next year. Besides the buyback, the bank has set aside $1 billion for cash dividend it expects to propose to shareholders in April. The bank's buyback prospects were a key focus for investors and analysts ahead of the results.

The move comes as Switzerland's largest bank almost doubled its third-quarter net profit, which, at $2.09 billion, were well above analysts' expectations of $1.56 billion. In the same period last year, net profit was $1.05 billion

UBS's investment bank arm had a strong quarter, with the unit's pretax profit more than doubling, mirroring the positive performance of some of the largest banks in the U.S. Market volatility led to a strong client activity, with global markets revenue up 42%--marking the best third-quarter performance since 2012. The bank's key wealth-management unit also posted 18% growth in pretax profit, achieving the best third-quarter pretax profit since 2011.

The Swiss bank posted credit losses of $89 million, more than the same period last year but much less than the figure posted for the second quarter and below the $201 million analysts had forecast. In the fourth quarter, credit losses should remain much lower than the levels seen in the first half.

The results include a gain from the sale of a majority stake in UBS Fondcenter, the bank's B2B fund-distribution platform. Announced in January, the deal also boosts the bank's core tier 1 capital, a key measure of capital strength.

Looking ahead, the bank warns that geopolitical uncertainties and the coronavirus pandemic may affect investor sentiment.

"Our third-quarter results continue to demonstrate that our strategy is differentiating us as we continuously adapt and accelerate the pace of change," said Mr. Ermotti, who will become chairman of reinsurance giant Swiss Re AG next year.

 

Write to Pietro Lombardi at pietro.lombardi@dowjones.com; @pietrolombard10

 

(END) Dow Jones Newswires

October 20, 2020 01:54 ET (05:54 GMT)

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