UBS Plans More Share Buybacks as Wealth Management Shines

ZURICH—UBS struck a confident tone on Tuesday, reaffirming key financial targets and pledging more share buybacks next year, buoyed by higher interest rates and strong wealth management inflows.

The world’s biggest wealth manager reported a smaller-than-expected 24 percent slide in third-quarter net profit, with lower costs and rising interest income helping to mitigate the impact of turbulent financial markets.

The Swiss bank attracted $17 billion in net new fee generating assets in wealth management and $18 billion of net new money in asset management, with strong performances from all major regions.

“The focus in the results should fall on the very positive net new money in Wealth Management,” said analysts at ZKB.

JPMorgan analysts saw a link between the Swiss bank’s ability to attract new funds and the woes at struggling rival Credit Suisse.

“UBS has continued to gain from recent CSG uncertainty in 3Q and likely to do so in 4Q in terms of net new fee generating assets,” they said.

Chief Executive Ralph Hamers told reporters only that UBS was gaining clients from several competitors.

HSBC, also reporting on Tuesday, said profits slid 42 percent in the third quarter due to rising loan losses and asset sales. Credit Suisse reports on Thursday, when it is also due to unveil details of strategic overhaul.

More Buybacks

UBS’s net profit attributable to shareholders fell to $1.73 billion, ahead of $1.53 billion forecast by 17 analysts in a company-gathered consensus.

Revenue came in $8.2 billion, a 10 percent drop from the same quarter a year earlier.

Investment banking was particularly hard hit by financial market turmoil, with revenues in its global banking division, which advices on deals and capital raisings, plunging 58 percent.

Global markets revenues, however, fell only 1 percent, with derivatives benefiting from increased volatility including in foreign exchange.

Net interest income (NII) jumped 14 percent to $223 million as central banks cranked up interest rates, and UBS forecast an extra $200 million of NII in the final quarter of the year.

The bank, which reaffirmed its cost/income ratio and return on capital targets for 2022, said it was aiming for share buybacks of around $5.5 billion this year.

It had said in September it planned to increase its dividend by 10 percent and expected 2022 share repurchases to exceed its $5 billion goal, boosting payouts from its strong balance sheet after scrapping a $1.4 billion deal to buy U.S. group Wealthfront, an automated wealth management provider.

“In terms of 2023, we expect to have material share repurchase, but we are not being more specific about the levels,” Hamers said.

By Noele Illien