UBS Q3 Profit Surges 99%, Sides $1.5 Billion for Share Buybacks

Swiss investment banking giant, UBS (SWX:UBSG) performed strongly in the third quarter of 2020, with a 99 percent year-on-year rise in its net profit.

In absolute numbers, the wealth manager ended up with a net income of $2.1 billion for the quarter, beating the analyst estimates. The pre-tax profits for the period increased by 92 percent to $2.6 billion, which made Q3 of 2020 the best third-quarter for the bank in a decade.

“Our third quarter results continue to demonstrate that our strategy is differentiating us as we continuously adapt and accelerate the pace of change,” UBS CEO, Sergio Ermotti said in a statement. “Our ability to focus on clients and achieve such strong financial performance over the first nine months of this year speaks to this.”

Ermotti will be replaced as the Head of UBS by ING CEO, Ralph Hamers on November 1 this year.

“UBS has all the options open to write another successful chapter of its history under Ralph’s leadership,” Ermotti added.

The investment bank reported the astronomical numbers after a year-on-year dip of 11 percent in the previous quarter.

A major chunk of the gains came from its investment banking division that saw a 268 percent pre-tax profit increase, resulting from the growing demand in the Equities Equities Equities can be characterized as stocks or shares in a company that investors can buy or sell. When you buy a stock, you are in essence buying an equity, becoming a partial owner of shares in a specific company or fund.However, equities do not pay a fixed interest rate, and as such are not considered guaranteed income. As such, equity markets are often associated with risk.When a company issues bonds, it’s taking loans from buyers. When a company offers shares, on the other hand, it’s selling pa Equities can be characterized as stocks or shares in a company that investors can buy or sell. When you buy a stock, you are in essence buying an equity, becoming a partial owner of shares in a specific company or fund.However, equities do not pay a fixed interest rate, and as such are not considered guaranteed income. As such, equity markets are often associated with risk.When a company issues bonds, it’s taking loans from buyers. When a company offers shares, on the other hand, it’s selling pa Read this Term market. The asset management division’s pre-tax profits leaped 495 percent higher to $739 million.

The global wealth management reported an 18 percent increase in quarterly profits, while the banking division profits went up by 13 percent.

Major Buyback Plans Ahead

With the impressive performance, the bank put aside $1.5 billion for repurchasing its shares, and the program will begin next year under the new leadership. Keeping this reserve aside, the CET1 capital ratio has increased by 70 basis points to 14 percent last quarter.

Furthermore, UBS is in possible merger talks with Credit Suisse, and if that deal goes through, a major European investment bank will emerge.