UBS Q3 US sales plunge, profit down 19%

UBS issued 784 structured products worth US$1.3 billion in the US market in the third quarter of 2022.

Sales were down 41.4% from the same period in 2021 when volumes stood at US$2.2 billion across 1,643 structured products, SRP data shows. The amount represented a 23.8% decrease quarter-on-quarter.

The Swiss bank slid to the fifth place in terms of sales volume during Q3 22, after J.P. Morgan, Citigroup, Morgan Stanley and Goldman Sachs. The scale down comes after the UBS agreed to pay US$25m to settle investor fraud charges related to its UBS Yield Enhancement Strategy (YES) in June.

UBS was the most active manufacturer by issuance throughout 2021 and lost its crown to J.P. Morgan in Q1 22, which marketed 1,610 structured products compared to 1,522 from UBS. The issuance from UBS decreased to 915 in Q2 22, bringing US$1.7 billion sales volume.

In October and November, UBS issued 253 structured products worth US$389.6m in the US, translating to a market share of 3.8% by sales volume.    

For its Q3 22 offerings, the main external distributors were Morgan Stanley Wealth Management (33 products), Incapital (19), Raymond James (17), Goldman Sachs Private Banking (13) and J.P. Morgan Chase (8) – which reflects no changes compared to the prior-year period.

From an underlying standpoint, technology remains the top pick sector appearing in 70 products, followed by automobile, retail and banks. The software and services sector loss some traction in Q3 22 compared with a year ago as the number of products fell to 32 from 154 featuring underlying stocks of Crowdstrike and Snowflake. 

Europe

UBS issued 2,135 non-flow structured products in Q3 22 across Switzerland (2,054), Austria (61), Germany (61), Italy (10), Sweden (5), Norway (3) and Finland (2). The issuance was up from 1,282 compared with the prior-year period.

The products were wrapped as certificates tied to underlyings led by Novartis (176), Nestle (175), Roche (165), Sola (134) and Lonza (131). Majority of them had a tenor from one to three years while there are 786 products maturing in less than a year. Seven of the products had a tenor longer than six years, according to SRP data.

Asia-Pacific

UBS was the derivatives manufacturer of 20 structured products during Q3 22 in the Apac market – the products were sold in South Korea (14) and Japan (6).

Other distributors working with the Swiss bank this quarter include Hanwha Securities (5), Yuanta Securities (4), Samsung Securities (3) and NH Investment & Securities (2). 

The underliers deployed by UBS in the region cover 15 names including Tesla (9), Advanced Micro Devices (5) and S&P 500 (4).

The bank was also behind 658 private placements in Taiwan while in Hong Kong SAR it launched some 1,054 derivative warrants and callable bull bear contracts, 402 of which were linked to the Hang Seng Index.

Earnings

The bank reported that profit before tax dropped 18.9% to US$2.3 billion in Q3 22 year-on-year, or down 11.2% quarter-on-quarter. Revenues was 9.6% lower YoY, reaching US$8.2 billion as operating expenses were up 5.6% to US$5.9 billion.

From January to September, profit before tax totalled US$7.7 billion, down 1.1% year-on-year.

Global markets revenues dropped one percent to US$1.7 billion as execution services was down 15% mainly driven by lower cash Equities partly offset by electronic foreign exchange (FX). In addition, derivatives & solutions rose 11% YoY, marking ‘best underlying third quarter’ on higher FX and rates and elevated volatility.

Global banking revenues fell 58% to US$329m in Q3 22 as advisory was down 49% to US$136m with Apac and Emea M&A outperforming the fee pool.

Together, the two segments led to US$2 billion revenues at the investment bank division, which was a 19% decline year-on-year. 

Global wealth management and asset management business lines reported profit before tax of US$1.5 billion and US$140m in Q3 22, representing a decrease of four percent and 34% YoY, respectively.

‘We delivered a good result of US$2.3 billion profit before tax in a challenging environment. Our clients turned to us for advice and entrusted us with US$17 billion of net new fee generating assets,’ said CEO Ralph Hamers (pictured).

Click here to view UBS AG’s Q3 22 earnings presentation.