UBS: Significant Profit jump in Q3…

UBS earned significantly more in the third quarter of 2020 than in the previous year.
And the expectations of the market were also clearly exceeded. In addition to higher yields, one-off effects also helped.

The bottom line was that UBS earned $ 2.1 billion in the July to September period, which is double that of the previous year. Before taxes, it achieved a profit of 2.6 billion after 1.4 billion in the same period of the previous year, as stated in a statement on Tuesday. The big bank has thus clearly exceeded the estimates of analysts according to the AWP consensus.

The valuation allowances for credit risks decreased significantly in the third quarter: after a total of 540 million dollars in the first half of the year, it was 89 million. And UBS assumes that the value adjustments in the current fourth quarter will be well below the first half of the year.

Most of the pre-tax profit comes from its core business, global wealth management (GWM), at $ 1.1 billion. In the quarter under review, UBS attracted new money of 1.4 billion and thus managed – as the world’s largest asset manager – 3,807 billion at the end of September.

As the bank also announced, it wants to apply for the second tranche of the dividend for 2019 as planned and distribute it in November.

UBS Switzerland business with declining profit
In the third quarter of 2020, UBS performed well above the previous year and also well above the market’s expectations. In addition to a few one-off effects, this was primarily due to the operational performance of most areas. Only business in Switzerland declined.

Specifically, the pre-tax profit fell by 13 percent to 305 million francs. The main reason for the decline was value adjustments for credit risks of 84 million francs. According to information on Tuesday, 54 million of this was accounted for by a case of fraud involving a counterparty active in commodity trade finance, which affected other creditors in addition to UBS. The remaining commitment here is now “minimal”, emphasized the bank.
Another reason for the declining result was the decline in credit card fees and income from foreign exchange transactions, which were lower than usual due to the corona pandemic. The growth in net new business volume in private banking was meanwhile strong at 5.6 percent.

In principle, however, UBS also sees itself as being well positioned in the domestic market. In the mortgage business (volume: 149 billion, 65% share), for example, there are no signs of stress. The risks in the commercial, retail and office portfolio are carefully monitored, said CFO Kirt Gardner at today’s analyst conference. The Lombard loans (32 billion) are also fully funded and are also monitored daily.

According to UBS management, 15 billion or 6 percent of the loans go to SMEs in Switzerland. In this context, it was said that the total amount of loan commitments claimed as part of the state Corona loan program from 1.6 billion francs (48%) as of July 31, 2020 to 1.7 billion (52%) as of September 30 have increased.

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