UBS reports strong revenues in equity derivatives

UBS has reported 'good third quarter results' with net profit attributable to shareholders up 14% year on year to CHF946m (€816m). The Swiss bank also reported that profit before tax increased by 39% to CHF1.2bn and adjusted profit before tax increased by 16% to CHF1.5bn.

The net tax expense for the third quarter was CHF272m, including a net write-up of deferred tax assets of CHF174m mainly driven by higher US profit forecasts beyond 2017. Group annualized adjusted return on tangible equity was 10.2%, or 13.3% excluding deferred tax assets.

In the global retail structured products market UBS has issued 3,871 structured products with estimated sales of $6.1bn year to date, according to SRP data. In the third quarter of 2017, the Swiss bank has marketed 1,212 raising $2.1bn significantly up from the 832 products ($1.3bn) that were issued during the same period in 2016.

In Europe, UBS was the fourth most active issuer behind Vontobel, Commerzbank and Leonteq, with 282 products and 518m. In its home market Switzerland, the bank issued 276 products (mainly reverse convertibles) worth an estimated CHF580m (Q2 2017: 131 products/ CHF374m)

In the US market, UBS was the most prolific issuer (by issuance) in the third quarter with 731 products marketed worth US$759m, compared to 842 products issued in the previous quarter which sold US$867m. In Asia Pacific, the Swiss bank came second in terms of issuance with 199 products launched with an estimated €796m.

Then bank's Corporate Client Solutions revenues increased for a fourth consecutive strong quarter with Investor Client Services driving strong revenues in equity derivatives which partly offset reductions in other business lines, 'reflecting lower client activity and low market volatility'. The annualized adjusted return on attributed equity was 15%. In addition the Investment Bank delivered 3% adjusted profit before tax growth, as continued strong Corporate Client Solutions results offset the lower revenues in Investor Client Services in a challenging market environment for flow businesses.

Global wealth management adjusted profit before tax rose 4% year over year to CHF1.04bn, with growth in all revenue lines. Personal & Corporate Banking had the highest third quarter annualized net new business volume growth for personal banking in a decade, according to UBS. Adjusted profit before tax was CHF436m, as management actions and client activity mostly offset increased funding cost and interest rate headwinds. Asset Management adjusted profit before tax increased by 11% and its invested assets reached a nine-year high of CHF744bn.

UBS's capital position remains strong, with a fully applied CET1 capital ratio of 13.7%, a CET1 leverage ratio of 3.7% and total loss-absorbing capacity of CHF78bn, according to the report which also points that during Q3 2017, Fitch Ratings and Scope Ratings upgraded UBS AG to 'AA-' (stable outlook).

As of September 2017, the Group achieved CHF1.9bn of annualized net cost savings and is on track to achieve its CHF2.1bn target by the end of 2017.

UBS also highlighted its commitment to digitalization, emerging technologies and changing client behavior in the third quarter 2017, with a number of initiatives, including the launch of the One Wealth Management Platform (One WMP) in Asia Pacific which places around 80% of wealth management's global assets onto a single operational IT platform; the launch of the UBS-initiated crypto-currency Utility Settlement Coin (USC) which has six new partners as has entered Phase III of its development; and the partnership with IBM and other leading international banks to advance an open blockchain-based trade-finance platform called Batavia.

UBS also reported several initiatives relating to its sustainable performance including the launch by the investment bank of a series of investment products aligned to the 17 UN Sustainable Development Goals (SDGs) which will allocate a pre-defined portion of proceeds as philanthropic contributions to its dedicated philanthropic UBS Optimus Foundation.

'We again saw good results across our business divisions with Asia Pacific as an important driver of profitable growth. We remain focused on disciplined execution and creating long-term value for our shareholders,' stated Sergio P. Ermotti, group chief executive officer.

Click in the link to read the full UBS report.

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