UBS Beats Market Expectations, Reports 32% Rise in Profits

The solid performance was driven by higher loan volumes and solid growth in both equities and forex trading.

UBS, a Swiss multinational investment bank and financial services provider, has reported better-than-anticipated third-quarter results this Thursday morning. Yet again, the results were driven by the firm’s investment bank which experienced higher loan volumes and solid growth in both equities and foreign exchange (forex) trading.

According to Reuters, analysts forecast that UBS would see a net profit of CHF 1.018 billion ($1.022 billion) in the third quarter of 2018. However, the bank managed to achieve a net profit of CHF 1.2 billion.

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This is a significant jump of 32 percent from what the Swiss bank reported during the third quarter of 2017 and its also up around 15 percent from what analysts surveyed by Reuters expected.

Operating income was also up year-on-year, coming in at CHF 7.3 billion, which translates to an increase of almost 2 percent. Diluted earnings per share were also up from CHF 0.25 in the third quarter of 2017, to CHF 0.32 in the current period.

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UBS Experiences Strong Uptick in Equities and Forex Trading

Taking a look at the firm’s investment bank unit, net interest income and other net income from fair value changes on financial instruments increased by CHF 53 million to reach CHF 1.1 billion.

This increase was thanks to a CHF 145 million uptick in Investor Client Services. In turn, this increase was due to improved trading performance and higher client activity levels in forex, rates, and credit. In addition, equities also saw an increase in trading activity, which resulted in higher revenues across all products and regions.

Sergio P. Ermotti, CEO of UBS AG
Sergio P. Ermotti
Source: UBS

Commenting on the results, Sergio Ermotti, the Group Chief Executive Officer said: “our results for the quarter once again highlight the benefits of our diversification. They also demonstrate that we are pursuing a focused strategy in each of our business divisions, creating value for our clients and shareholders.”

UBS also warns that ongoing geopolitical tensions, rising protectionism, and trader dispute continue to degrade investor sentiment and confidence. However, while the firm believes that if this is to continue it will be negative for its global wealth management activity, it also highlights that increased volatility from these issues could be beneficial for its investment banking unit.

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