UBS profits rise 32 percent for its third quarter, beating market expectations

  • Net profit hit 1.2 billion Swiss francs ($1.2 billion) for the third quarter of 2018.
  • Ahead of the results, analysts were pointing to a net profit of 1.018 billion francs, according to a Reuters poll.

UBS reported stronger-than-expected results on Thursday morning on the back of higher loan volumes, as well as strong growth in equities and foreign exchange trading.

Net profit hit 1.2 billion Swiss francs ($1.2 billion) for the third quarter of 2018, which was 32 percent higher than what the bank had reported for the same period last year. It also beat expectations, with analysts predicting a figure of 1.018 billion Swiss francs, according to Reuters.

Here are some of the key highlights for the third quarter of 2018:

  • Operating income: 7.3 billion Swiss francs, versus 7.1 billion Swiss francs in the third quarter of 2017.
  • Net profit: 1.2 billion Swiss francs, versus 946 million Swiss francs in the third quarter of 2017.
  • Diluted earnings per share: 0.32 Swiss francs, versus 0.25 Swiss francs in the third quarter of 2017.
  • Common equity tier 1 capital ratio: 13.5 percent, from 13.7 percent in the third quarter of 2017.

"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." Sergio Ermotti, Group Chief Executive Officer of UBS, said in a statement.

UBS cautioned against ongoing geopolitical and trade tensions, which could dent investor sentiment. However, the bank also said that monetary policy normalization and the recent increase in volatility are "generally positive" for the firm.

Speaking to CNBC, Ermotti said that the despite the market moves throughout the year, clients are sticking to their asset choices.

"What's very interesting to observe is that despite all of these changes…clients are not yet moving their asset allocation, they stick in the good and bad times to their asset allocations," Ermotti told CNBC's Joumanna Bercetche.

Looking at the performance of the different units, asset management and investment banking registered the strongest growth from a year ago. The latter reported an adjusted operating profit before tax of 507 million Swiss francs in the third quarter of 2018, compared to 352 million in the third quarter of 2017 — a 44 percent increase.

One step further

UBS also said it had repurchased 100 million Swiss francs more of its own shares during the third quarter, going beyond its initial target. The bank said in July that it had hit its target for the year, by buying 500 million Swiss francs worth of its own shares; but it also left the door open to further buybacks if market conditions were good.

"Only over time we will find out if that was an efficient way of using shareholder capital," Ermotti said about the buyback plan.

"We need to keep executive out strategy and at the end of the day one way or the other the stock price will reflect the value of our franchise," he added.