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UBS profit outstrips forecasts

UBS logged a solid third-quarter performance Keystone

Switzerland’s largest bank, UBS, has reported its most profitable quarter in three years, with third-quarter net profit up 78 per cent on a year ago at SFr1.673 billion ($1.22 billion).

This content was published on November 11, 2003 - 08:16

UBS, the world’s largest asset manager, said on Tuesday that in the third quarter clients brought SFr20 billion in net new assets.

“It is our most profitable quarter in three years, with performance up in all our businesses compared to last year,” commented CEO Peter Wuffli.

“We captured revenue opportunities despite volatile markets, particularly in fixed income, while the strong net new money inflow again shows our substantial competitive progress,” he added.

Analysts in polls had been expecting a third-quarter net profit of around SFr1.4 billion.

Operating income was SFr8.49 billion, up by six per cent over the same period last year.

Senior European banks analyst David Hussey at Barclays told swissinfo that the figures had been well received by the market.

"I think what has come through strongly here is that the revenues from the private bank, which is pretty much the core of UBS, have remained very strong," he commented.

"All across the board, we’ve seen pretty strong numbers for the whole group," he added.

Cost cuts

UBS explained in a statement that cost cuts and rising revenues from improved market conditions had boosted net income.

It commented that costs remained “under tight control” and had been cut in almost areas.

Total operating expenses fell six per cent to SFr6.353 billion, with general and administrative expenses down 17 per cent.

Wuffli said the company would continue to shed jobs, mainly in Switzerland, but that there would be no large-scale cuts.

UBS, the world’s seventh largest bank, did not give a detailed outlook in the statement.

It said that throughout the year, market conditions had fluctuated, with trading opportunities shifting from one area to another. UBS was well positioned to capture those opportunities at the right time.

Market conditions improving

But it commented that global economies and market conditions had been gradually improving.

“The stronger and more certain the recovery proves, the more positive the effect on our revenues,” said Wuffli.

“Our successful track record in delivering consistently excellent results across different market challenges and environments gives us confidence that UBS will continue to offer first-class shareholder returns.

Barclays analyst Hussey said he believed that the profits being made by UBS were sustainable.

"I think these profits are probably going up. Market conditions are definitely improving and the management statement alludes to that," he said.

"I think if we continue to see a global economic recovery that gathers pace, then market levels will improve and UBS is fairly well positioned, simply because the private bank is an asset business. I’d say the sustainability of the profits is very strong indeed," he added.

Share gains

Shares in UBS have gained 22 per cent over the past year, giving the group a market value of SFr91.5 billion, the third highest among European banks.

The stock has handed investors a total return, including reinvested dividends, of about 34 per cent since the end of 1998. Shares in rival Credit Suisse have produced a loss over the same period.

Last week Credit Suisse reported a third-quarter net profit of SFr2.045 billion, after posting a record loss last year of SFr3.3 billion.

In a major restructuring programme, it has sold off insurance businesses and cut about 10,000 jobs.

swissinfo with agencies

UBS

UBS has reported a third-quarter net profit of SFr1.673 billion, up by 78% over the comparable period last year.

In the July to September period, clients brought in SFr20 billion in net new assets to the group.

The result surpassed analysts' expectations. A poll among them predicted on average a net income of around SFr1.4 billion.

The bank commented that global economies and market conditions had been gradually improving.

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UBS2

UBS made a net profit of SFr1.214 billion in the first quarter and SFr1.639 billion in the second.
The total net profit for the January to September period is SFr4.526 billion.
The bank reported a net profit of SFr5.529 billion in 2002.
At the end of September, UBS had a staff of 66,153, some 4% lower than at the beginning of the year.

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