UBS' profit rose by 14 percent in the third quarter. Cost-cutting across the Swiss bank's businesses as well as an unexpected tax boost in the U.S. helped the result.
The Zurich-based bank said net profit rose 14 percent on the year to 946 million Swiss francs. UBS crunched its spending by nearly 4 percent on the year, and said it has now slashed its overall expenses by 1.9 billion Swiss francs – its year-end target is 2.1 billion francs.
Beyond the headline profits, business in its main divisions looked mixed. UBS' private bank, led by Juerg Zeltner, hiked pre-tax profits on a rise in managed assets, interest rates in the U.S. edging higher, more fees from portfolio mandates, and a rise in lending to the wealthy.
Behind the asset rise, the private bank's net new money for the quarter – 2.4 billion francs – translated to anemic growth of 1.8 percent. In Asia, where UBS' private bank added 20 private bankers in the quarter, the growth rate stood at 3.5 percent.
UBS' investment bank slashed its spending by more than 6 percent, to protect its profits from low client activity and little market volatility – the bane of its existence. The bank's smallest unit, asset management, hiked profits before tax by nearly one-quarter to 127 million francs by cutting spending. The unit also won more fee income, which rises as the amount of assets rises from market performance.
The bank's hardest form of capital edged higher to 15.1 percent, from 14.8 percent at the end of June. UBS, always reluctant to give an outlook, said client activity – and thus revenue and profits – is subject to everything from central bank policy decisions to a holiday lull to low volatility. While the U.S. is gently lifting interest rates, UBS said persistently low and negative rates in Switzerland and home markets would offset much of this.
The bank, which added 1,326 employees in the quarter, also cautioned that upcoming financial regulation will cost it more capital, funding and spending.