UBS logs highest quarterly profit in six years on fee bonanza from the wealthy

UBS posted its highest quarterly profit since 2015 on Tuesday, as robust trading activity by the world`s ultra wealthy led to a 23% surge in fee income.

But Switzerland`s largest bank sounded a slightly cautious note for the coming quarter, saying continued uncertainty surrounding economic recovery and recent policy changes in China could hurt business. It also noted client activity levels had been unusually high in the past quarter.

See Zee Business Live TV Streaming Below:

Its third-quarter net profit of $2.279 billion easily surpassed a median estimate of a 24% slump in profit to $1.596 billion from a poll of 23 analysts compiled by the bank.

UBS shares were indicated up 2.2% in premarket trade.

"Our business momentum, our focus on fueling growth, on disciplined execution and on delivering our full ecosystem to clients - all of this led to another strong quarter across all of our business divisions and regions," Chief Executive Ralph Hamers said in a statement.

The bank`s flagship wealth management business saw pre-tax profit soar 43% on a 4% climb in income from transactions amongst its wealthy and ultra-wealthy clients as well as a 15% rise in net interest income on higher lending levels and margins.

The division saw $18.8 billion in fresh client fee-generating inflows, while invested assets fell slightly from June to $3.198 trillion.

UBS`s investment bank posted a steadier performance, with revenue edging 1% higher. Revenue in its equities trading unit was up 3% to $1.36 billion, but its foreign exchange, rates and credit arm posted a 32% drop in turnover to $363 million.

Revenue from advising on deals and listings jumped 22% to $792 million, helped by bumper M&A volumes.

The surprise profit comes on the heels of a stellar quarter for U.S. and British banks which, encouraged by economic rebounds, released cash set aside for pandemic losses. A record wave of dealmaking activity also bolstered results for the likes of Goldman Sachs and JPMorgan.

It also follows double-digit percent gains for net profit in each of the past four quarters as buoyant markets helped UBS generate higher earnings off of managing money for the rich.

CEO Hamers, who took the reins in November 2020 following a successful tenure digitalising Dutch lender ING, said he planned to present an updated strategy on Feb. 1.

That will include new pushes into digital and hybrid banking, presentation slides showed.

UBS is trying to improve its digital services to reach more customers outside its super rich core client base, while also saving on costs. It sees potential for a new online platform to pull in $30 billion in the next year after being launched in May 2020, Reuters reported in June.

As part of its 2025 vision it wants to build a digitally scalable advice model for affluent clients in the Americas, which includes the core wealth market of the United States.

It also wants to expand its digital offerings in its home market, aiming to bring its cost/income ratio down to 55% in its Swiss business from 59% in the first nine months, it said.