By Ariane Luthi
ZURICH (Reuters) -UBS said third-quarter net profit surged 74%, comfortably beating expectations as revenue shot higher on financial market volatility caused by global tariff turmoil, as well as renewed M&A activity.
Switzerland’s largest bank also said it was confident in its plans for $3 billion in share buybacks this year and its financial targets for 2026. It noted, however, that macro uncertainties, a strong Swiss franc and higher U.S. tariffs were clouding the outlook for the Swiss economy.
Shares in UBS rose 2.5% in morning trade.
UBS expects deal activity to remain healthy in the fourth quarter, but said “sentiment can shift quickly as confidence in the outlook is tested.”
A prolonged U.S. government shutdown could delay capital market activities, it added.
UBS also said it intends to appeal a Swiss court decision, already challenged by Swiss market regulator FINMA, that the writing off of 16.5 billion Swiss francs in Credit Suisse bonds was unlawful. The bank has no plans to make any provisions in relation to the case, UBS said.
LEGAL PROVISIONS RELEASED
Net profit came in at $2.5 billion. That trumped a consensus estimate of $1.29 billion and marked its best result since one-off factors related to the integration of former rival Credit Suisse led to a profit of over $27 billion in the second quarter of 2023.
A release of legal provisions worth $688 million also contributed to the earnings beat. They were mainly related to the resolution of Credit Suisse’s residential mortgage-backed securities business and a UBS case in France.
UBS attracted $38 billion in net new money to its global wealth management division and $18 billion to asset management, bringing total invested assets close to $7 trillion.
Strong inflows from Asia more than offset outflows in the Americas, where UBS this week applied for a U.S. banking license.
In UBS’s investment banking division, revenues jumped 52% year-on-year in global banking and 14% in trading, marking a record third quarter for both these business areas as deal-making activity resumed.
Integration of Credit Suisse further progressed, UBS said, adding that over two-thirds of Swiss-booked client accounts have been migrated.
Citi analysts wrote in a note that while UBS had delivered a strong set of results, there was still a lack of clarity surrounding its future business model given pressure within Switzerland on the bank to increase its core capital levels by some $24 billion – a measure aimed at protecting the country should the bank run into difficulties.
The bank, which has been lobbying to soften those requirements, said it would continue to contribute to the debate on banking regulation in Switzerland without providing further detail.
Reuters reported last month that Switzerland and UBS are, in private, signalling a willingness to compromise on capital rules, potentially paving the way for parliament to settle on lower requirements acceptable to the government and the bank.
(Reporting by Ariane Luthi; Additional reporting by Dave Graham; Editing by Edwina Gibbs)
