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The lower performance in UBS’s equity derivatives, cash equities, and financing revenue all dragged the investment banking unit to record a 19% slump in its revenues.
Swiss multinational investment bank and financial services company UBS Group AG (SWX: UBSG) has posted lower revenue in its third quarter compared to its performance in the year-ago period.
The company posted revenue of $8.3 billion as against the $9.1 billion it reported in the year-ago period. UBS said its net income for the third quarter came in at $1.7 billion, a figure that is more than the $1.64 billion projected by analysts polled by Refinitiv. The company’s income was much better in the previous financial year as it came in at $2.3 billion at the time.
UBS like its global American counterparts has recorded impressive growth in some of its core business units and general depression in others. In fact, Chief Executive Officer Ralph Hamers believes the pangs of geopolitical tensions, and the receding global economy has continued to pose serious headwinds for its business across all of its operating jurisdictions.
“The macroeconomic and geopolitical environment has become increasingly complex. Clients remain concerned about persistently high inflation, elevated energy prices, the war in Ukraine, and residual effects of the pandemic,” Hamers said in a statement.
The company recorded an operating expense that was tapered down compared to the year-ago period. The operating expense came in at $8.3 billion as against the $9.1 billion respectively. The lower performance in UBS’s equity derivatives, cash equities, and financing revenue all dragged the investment banking unit to record a 19% slump in its revenues.
Despite this gloomy outcome, the global wealth management division did not fare any better as revenues dropped by 4% when compared to the year-ago period. While Hamers believes some of these headwinds will still be a major impediment in the fourth quarter, he currently takes solace in the personal and corporate banking offshoot which recorded a surge in revenues on account of better foreign exchange instituted by the Swiss National Bank.
UBS to Bolster Revenue with Business Push in China
Unlike the Chinese tech sector that went on a bearish slump at the news of President Xi Jinping retaining power for the next 5 years and packing the Politburo Standing Committee with loyalists, Hamers actually believes the stability the president will bring is healthy for its business advancement in the country in the near future.
“The confirmation of [China President] Xi for another term is on one side basically the confirmation of consistency going forward, so some of the policies that he has come out with over the last year will most likely be continued,” Hamers said.
While he hopes to expand its business on the global scene in general, Hamers believes Europe will be a relatively more challenging region to do business in the fourth quarter considering the Russo-Ukrainian war that is not abating and the residual fallout from the COVID-19 pandemic.
UBS shares on the New York Stock Exchange closed Monday’s session at $15.18, atop a 1.67% growth.