Wealth Management
Analysts at JPMorgan and Jefferies International Ltd pointed to strong cost control at the bank as an underlying reason for the above-estimate results.
“We like UBS for the net-interest-income upside without associated credit risk, attractive capital return and limited earnings risk,” Jefferies analysts including Flora Bocahut wrote in a note.
In wealth management, UBS saw client activity decline, with net fee income down 14%. Even so, the unit posted a 23% increase in the interest income charged on loans to wealthy clients. Profit before tax at the unit was up 4% from a year ago at $1.5 billion, higher than estimates. Recurring fee income fell 14% on the back of market declines.
“I don’t think they’re in full fear,” Hamers said “But they’re more on the sidelines and not so much completely withdrawing from the markets.”
Hamers said he sees more upside for net interest income specifically in the euro area and in Switzerland next year, as central bankers continue a struggle against inflation.
UBS has been among the lenders hit by a slowdown in trading activity in Asia, driven by pandemic controls as well as a decreasing demand for exports. The tightening Covid controls in China have worried global investors since the start of the year.
Revenues at the investment-banking unit followed US peers, declining 19% amid a broader slump in deal-making and equities. Advisory revenue fell 58%. In asset management, total revenues were down 13% from a year ago, with management fees down 10%.
This article was provided by Bloomberg News.