UBS Reports A 24% Drop In Profits But Still Manages To Meet Analyst Predictions

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Last Updated on October 25, 2022 by Bitfinsider

The Swiss bank UBS stated on Tuesday that it had a net income for the third quarter of this year of $1.7 billion, which was slightly beyond the forecasts of industry analysts. UBS cited a demanding environment as the reason for its strong performance.

According to the statistics provided by Refinitiv, industry experts anticipated a net profit of $1.64 billion. In the previous year, UBS had a net income of $2.3 billion to declare.

When it reported a net profit of $2.108 billion in the most recent quarter, the Swiss lender fell short of expectations in that regard. Due to soaring inflation, the war in Ukraine, and tight Covid-19 rules in Asia, the bank stated at the time that the second quarter had been “one of the most trying periods for investors in the last 10 years.”

UBS reported on Tuesday that these considerations remained high on investors’ priority lists during the third quarter.

“Both the macroeconomic and geopolitical environments are becoming more difficult to understand. Ralph Hamers, the CEO of UBS, said in a statement that customers are still concerned about issues such as continuously high inflation, higher energy prices, the conflict in Ukraine, and the lingering consequences of the pandemic.

The weaker performance in stock derivatives, cash equities, and finance revenue was partially offset by sales in foreign exchange, resulting in a 19% decline in revenues for the investment banking section of the company. Additionally, the Global Wealth Management business reported reduced sales, which fell by 4% when compared to the previous year’s totals.

On the other hand, income from Personal and Corporate Banking increased during the same time period as a result of more favorable rates from the Swiss National Bank.

Hamers mentioned on Tuesday that clients on its wealth side were seeking for alternative assets and cash, and he projected that activity on the institutional side of its trading business would remain slow in the fourth quarter. Hamers was speaking about the company’s trading operation.

According to Hamers, “the confirmation of China President Xi for another term is on one side basically the confirmation of consistency going forward,” which means that some of the policies that he has come up with over the course of the last year would most likely continue.

He went on to say that the Swiss bank is interested in China “because of its demographics and some of the features of the economy.” He continued by saying, “We think over time it is going to be a really attractive site, so it is a strategic place.”

In other news, Europe is likely to have a “difficult” moment, according to Hamers, because of the ongoing energy crisis and the war in Ukraine.

“Europe will have a hard period, a challenging winter although they have their reserves,” he said, adding that the Swiss bank anticipates that the region will enter a recession. “Despite the fact that they have their reserves,” he continued, “they will have a challenging winter.”

During the late morning session of trading in Europe, UBS’s stock rose by more than 4%.

Vitaline Yeterian, senior vice president at DBRS Morningstar, stated in an email that “We consider UBS’s Q3 results to have been reasonably good considering the challenging operating environment.” This is despite the fact that the net attributable profit was down 24% when compared to the same quarter the previous year.


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