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UBS says that its wealth management division pushed the value of invested assets to $3.2 billion, and increased pre-tax profit by 43%.
Swiss banking giant UBS Group AG (SWX: UBSG) beat analysts’ expectations in its third-quarter (Q3 2021) report thanks largely to its wealth management division. Fees gotten from wealthy clientele saw the leading bank report a net profit of $2.3 billion, higher than Wall Street’s $1.57 billion estimates according to Refinitiv. This represents a 9% increase from the same period last year and the best result in six years. In addition, there was a 23% increase in recurring net fee income.
Also owing to UBS’ wealth management division, invested assets surged to $3.2 trillion, while pre-tax profit increased 43% to $1.5 billion. Furthermore, the bank said it attracted $18.8 billion in new net fee-generating assets in the quarter, adding that client activity was unusually high in the quarter. In the nine months leading to September 30th, the Swiss multinational bank raked in $80 billion. As chief executive officer Ralph Hamers described to CNBC on Tuesday:
“There is continued momentum in the markets. We are getting more clients; clients are looking for alternative investments — we have been able to support them through the ecosystem of opportunities”.
However, UBS suggested that it expects client activity to slow down for the year’s final three months. It specifically pointed out continued uncertainty surrounding economic recovery and recent policy changes in China as potential causes.
In light of the Q3 report, UBS shares were up 2.2% in premarket trade, and 24% year-to-date. Furthermore, other notable developments included the bank’s operating income coming in at $9.1 billion versus $9 billion from the previous quarter. In addition, CET 1 ratio reached 14.9%, compared to 14.5% from the previous three months. Finally, UBS’ return on equity was 15.3%, up from 13.7% recorded in the previous quarter.
UBS Unsure about Offering Crypto Exposure Despite Wealth Management Success in Q3
UBS generated most of its growth for the quarter in global banking. This encompasses offering advice on companies on stocks and bond deals, as well as mergers and acquisitions. Recently, major banks in Europe and the US have been cashing in exponentially on securities trading and corporate deal-making. Hamers suggested he does not see that trend changing anytime soon, and expects UBS to benefit further. As he put it:
“We do expect, on the M&A side, on the advisory side, and even on the equity capital markets side, it continues momentum there — investors are still seeking to invest, we expect them to stay constructive for the foreseeable couple of months.”
Despite digital currencies gradually making inroads into institutional finance and mainstream investing, Hamers still prefers to play the waiting game. Other world-renowned banks like JPMorgan have begun offering crypto exposure to qualified investors looking for sizable and fast returns. However, Hamers says there was still too much uncertainty surrounding crypto for UBS to also take the initiative. Much of that has to do with the volatility, inadequate regulation, and relative inexperience of investors who put money into it.
Only last week, the US launched its first-ever Bitcoin futures exchange-traded fund.