UBS Sets Aside Reserve for Buybacks After Strong 3Q -- Update
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
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
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 firstname.lastname@example.org;
(END) Dow Jones Newswires
October 20, 2020 01:54 ET (05:54 GMT)
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