UBS: strong EQD activities in Q3, despite falling volumes in US

UBS AG London Branch has traded US$2.9 billion notional from 1,182 structured notes registered with the US Securities and Exchange Commission (SEC) in the second quarter of 2024, according to SRP data.

This volume was the lowest in the past three quarters but was still noticeably higher than the same periods of 2023 and 2022, registering a 12.5% decline quarter-on-quarter (QoQ), and 38.3% increase year-on-year (YoY).

Despite a quieter month in September, the overall registered note segment finished the third quarter with a record traded notional at US$36.9 billion compared to US$32.7 billion for Q2 2024 and US$28.3 billion for the prior-year period, as SRP reported.

For the quarter, UBS took the sixth place in the issuer group league table trailing closely behind Barclays which traded US$3.1 billion out of 752 notes, and at some distance from US banks - J.P. Morgan, Citigroup, Goldman Sachs and Morgan Stanley -  which came up on top with US$5.7 billion, US$4.7 billion, US$4.3 billion and US$4.1 billion in sales, respectively.

UBS: issuances and sales of SEC-registered structured notes

_{Source: SRP}

The Swiss bank delivered its best-seller during the quarter via the Contingent Income Auto-Callable Securities with Memory Coupon - Amazon (90307DQ70) that was underwritten by Morgan Stanley Wealth Management with US$73.9m notional. With an estimated initial value (EIV) of 97.46%, the one-year phoenix note offers a contingent quarterly coupon of 10.05% pa. if the final underlying price doesn’t fall below 70% of its initial price.

UBS: five best-sellers of SEC-registered structured notes in Q3 2024

Product name	Notional (US$m)	Pricing date	Maturity
Contingent Income Auto-Callable Securities with Memory Coupon - Amazon (90307DQ70)	73.9	26/07/2024	29/07/2027
Digital ETF-Linked Medium-Term Notes - iShares 20+ Year Treasury Bond ETF (90307DZX3)	62.2	05/08/2024	06/08/2026
Autocallable Buffered Notes - WTI Crude Oil (90307QCG6)	49.0	04/09/2024	06/09/2027
Contingent Income Auto-Callable Securities with Memory Coupon - Blackstone (90307DU59)	42.3	16/08/2024	19/08/2027
Trigger Callable Contingent Yield Notes with Daily Coupon Observation - Worst of Option (90304N350)	41.1	18/07/2024	21/10/2027

 _{Source: SRP}

Next in line is the Digital ETF-Linked Medium-Term Notes - iShares 20+ Year Treasury Bond ETF (90307DZX3), which amassed US$62.2m with an underwriting discount of 1.47%. The two-year note offers a maximum coupon of 17% at maturity if the final underlying level doesn’t drop below 90% of its initial level, also referred to the ‘buffer level’. It has an EIV of 98.3% after a fee was paid to broker-dealer iCapital Markets.

In the entire registered note market, the third quarter saw two 100% principal-protected notes (PPN) on single stocks take the crown on the back of a combined US$501.5m notional with the same pricing date and maturity.

In terms of underlying types, single stocks picked up with US$1.1 billion, or nearly 38% of the total notional at UBS for the third quarter. Meanwhile, index basket pulled back with US$721.4m, forming a quarter of the total.

SRP additionally recorded two registered callable fixed rate notes worth US$3.0m launched by the Swiss issuer in the US in July. 

Across the globe, UBS also issued 19,514 structured products in its home market Switzerland, 7,776 listed turbos in Germany or Austria, 1,390 listed structured products in Hong Kong SAR, 583 structured notes in Taiwan. The Swiss bank also left a footprint in France (31), Italy (eight), Sweden (four), the UK (one), Spain (one) and the Netherlands (one).

Earnings

For Q3 2024, UBS AG reported net profit of US$1.4 billion, a 25.4% increase quarter-on-quarter, representing a recovery from a loss of US$715m in the prior-year period. Reported revenues of the group, led by Sergio Ermotti (pictured), were US$ 12.3 billion, up 5% YoY, while operating expenses decreased by 12% YoY to US$10.3 billion.

Global wealth management (GWM) posted US$25 billion in net new assets, fuelling the goal of US$100 billion groupwide in 2024. The bank has also generated US$15 billion of net new fee generating assets in the quarter, ‘reflecting strong discretionary mandate sales in all regions’. In addition, group invested assets increased by 15% YoY to US$6.2 trillion.

Transactional activity was strong during the quarter across both private and institutional clients. In GWM, underlying transaction-based income increased by 19% YoY with strong momentum across all regions, led by the Americas and APAC.

In the investment bank (IB), global markets delivered revenues of US$1.9 billion, up 31% YoY, mainly driven by higher client activity and the strength of our expanded franchise, with gains across all regions, particularly in the Americas.

The growth was mainly due to a 44% YoY increase in derivatives & solutions revenues at US$964m, reflecting increases mostly in equity derivatives, foreign exchange and rates revenues, which were partly offset by lower revenues in capital markets financing within the investment bank.

Within global markets, equities revenues increased 33% to US$1.4 billion, mostly driven by increases in equity derivatives and cash equities.

Click the links to read UBS AG’s Q3 2024 presentation and earnings report.

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