UBS global structured products sales fall YoY

UBS has posted a profit before tax (PBT) of US$2.8 billion (up 11% YoY), including net credit loss releases of US$14m, in the third quarter of 2021.

The Swiss bank has seen operating income increase two percent YoY, while operating expenses decreased by one percent. Net profit attributable to shareholders was US$2.2 billion (up nine percent YoY).

During the first nine months of 2021, UBS global wealth management (GWM) saw US$80 billion of net new fee-generating assets with inflows in all regions, and there was US$23 billion in net new lending across GWM and personal and commercial (P&C) banking, while strong client activity drove YoY increases of eight percent in transaction-based income in GWM and 44% in global banking income.

In addition, the bank led by Ralph Hamers (pictured) facilitated US$26 billion of investments into private markets from private and institutional investors – the bank’s private clients benefitted from the bank’s ‘scale to receive institutional-like access and pricing’.

In the global structured products market, the Swiss bank has slipped out of the top 10 issuer group ranking after a significant fall in issuance and sales YoY – the bank has issued over 55,000 products worth an estimated US$8.7 billion year to date, compared to 89,039 products issued worth US$11.9 billion during the same period of 2020.

UBS has sold 17,509 structured products worth an estimated US$2.8 billion in the global market during the third quarter of 2021, a six percent increase in issuance and 12% in sales compared with the previous quarter, but a 15% fall in issuance (20,610 products) and a 12.5% decrease in sales (US$3.2 billion) year on year, SRP data shows.

Year-to-date, the Swiss bank has seen its global issuance falling by almost 20% which has resulted in a 17% fall in sales.

Most of the sales during Q3 21 were driven by reverse convertibles (2,743/US$2.05 billion) and autocall structures (1,587/US$2.09 billion) followed by worst of products (183 products/US$755m) and protected trackers (1,235/US$446m).

North America

The US market remains the main structured products hub for the Swiss bank and continues to drive most of the issuance and sales. In Q3 21, UBS sold US$2.2 billion across 1,643 products, a seven percent fall in issuance but a one percent increase in sales (Q2 21: 1,769 products/US$2.1 billion).

The majority of the products issued by UBS in the US market were marketed by its wealth management unit (1,497 products/US$1.4 billion). Goldman Sachs sold 27 products issued by the Swiss bank worth US$241m, followed by Morgan Stanley (23 products/US$225m), Raymond James (36 products/US$144.8m) and InspereX - formerly Incapital (47 products/US$144.2m).

Autocall products took the lion’s share in Q3 21 with 1,434 products worth US$1.74 billion, followed by reverse convertibles with 1,457 products valued at US$1.73 billion. Other popular payoffs offered by UBS during the quarter included worst of (155/US$620m), protected tracker (112/US$418m), enhanced tracker (102/US$207m) and capped call (101/US$206m).

The top 10 underlyings offered by the bank in Q3 21 included seven stocks and three equity indices. The highest selling underlying during the period was the Russell 2000 which was featured in 71 structures worth US$353m, followed by the S&P 500 (75 products/US$329m) and the Nasdaq 100 (46 products/US$155m). The best-selling single stock underlyings were the Apple and Tesla shares with 71 products/US$134m and 88 products/US$108m, respectively.

Europe

In Europe, the Swiss bank also saw an increase in activity with a seven percent rise in issuance and a 10% increase in sales, compared to the previous quarter. However, issuance and sales were down by 11% and almost 60% YoY.

The autocall structure was the most utilised payoff type in Q3 21 by the Swiss bank in the old continent featuring on 145 products worth an estimated US$250m, followed by reverse convertible (1,278 products/US$215m) and snowball structures (39/US$77.4m).

The most featured underlying on UBS products during the quarter was the Eurostoxx 50 index which appeared on 215 products worth an estimated US$35.6m; followed by the Volkswagen (121 products/US$26.8m) and Daimler shares (170 products/US$20.1m).

Despite a significant number of leverage with stop loss flow products (4,541) marketed during the quarter in Europe the sales volume was almost symbolic at US$24m.

Apac

In the Apac region, UBS began to reactivate its activity after the second quarter saw a sharp decrease in issuance and sales.

The Swiss bank issued 53 products worth an estimated US$269m in Q3 21 compared to 1,600 products worth an estimated US$1 billion during the same period of 2020.

In the Apac region, UBS saw its callable structures driving most of the issuance and sales with 45 products marketed worth an estimated US$167m, followed by snowball structures (40 products/US$148m) while the combination of autocall and reverse convertible structures appeared in eight products worth an estimated US$102m.

Unspecified baskets of shares took the lead in Q3 21 with 45 products worth an estimated US$167m, followed by the Nikkei 225 (three products/US$78.4m), and S&P 500 (two products/US$65.2m). The best-selling single stock during the period was the Dai-ichi Life Insurance share which appeared in one product worth US$9m. 

IB & AM

The investment banking division saw its operating income increased by 1% YoY, or 11% excluding a US$215m gain from the sale of intellectual property rights associated with the Bloomberg Commodity Index family in Q3 20.

Global Banking revenues increased by 22%, or USD 141m, driven by advisory and capital market revenues, outperforming the overall global fee pool. global markets revenues decreased by 7% or US$126m.

Excluding this gain, revenues would have increased by five percent, primarily driven by higher revenues in equity derivatives, cash equities, prime brokerage and capital market financing.

The bank’s asset management business posted a gain of US$571m from the sale of a majority investment in Fondcenter AG (now Clearstream Fund Centre AG) in Q3 20. Excluding this gain, operating income would have been broadly flat YoY, as an increase in net management fees offset a decrease in performance fees.

Invested assets decreased by two percent sequentially to US$1.1 billion. Net new money was US$1.5 billion (US$1.1 billion excluding money market flows).

UBS stated that sustainability remains an important topic for the bank and its clients - sustainability-focused and impact investments grew an annualized 63% year-to-date and reached US$207 billion.

Click in the link to read the UBS Q3 2021 results announcement and full report.