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UBS earnings Q3 2019



Net income of Swiss lender UBS declined 16% year-on-year in the third quarter and Investment Banking Unit lost 59% in a "challenging environment".

The Bank's Net Income Net income attributable to shareholders was $ 1.049 billion in the third quarter. This is less than the $ 1.253 billion reported in the same quarter of 2018.

Here are some key highlights of the quarter:

  • Operating income reached $ 7 billion, compared to $ 7.5 billion a year ago.
  • The return on equity was 8.7% compared to 1
    1.1% in the previous year.
  • Tier 1 capital ratio of 13.1% compared to 13.5% in the previous year.

UBS also expects restructuring charges of $ 100 UBS, like its peers, is reviewing restructuring opportunities as banks continue to face the headwind of low and negative interest rates.

"Low and sustained negative interest rates and expectations of further monetary easing negatively impacted net interest income year-over-year," UBS said Tuesday. "As we implement our strategy, we balance investment for growth while maintaining efficiency," he added.

Rising interest rates are good for banks as they are able to lend money to investors at a profitable rate. Lower interest rates limit a bank's ability to generate profits, putting additional pressure on margins.

UBS announced in August to introduce an annual fee of 0.6% on cash savings in excess of € 500,000 and 0.75% on savings in excess of € 2 On Tuesday, CEO Sergio Ermotti told CNBC, "The entire industry is up the same negative interest challenge that is why we are unfortunately forced to overcome some of this pain, we do not really have to overcome the pain of negative interest rates, but I think it is inevitable that we will see the rest of the industry afterwards. "

Headwind

UBS Investment Banking and global wealth management continue to face headwinds. The lender's investment banking unit saw a 59% decline in underlying pre-tax operating profit in the third quarter of 2019.

Investment banking is a specific way of allocating capital to other companies, governments and other entities

Meanwhile, the bank's global wealth management business posted a 2% decline in adjusted operating income compared to the same quarter last year.

Addressing the Bank's problems with net interest income and recurring fee income, Ermotti was able to mitigate lower rates with higher transaction volumes and wanted to protect that momentum.

"When I look at recurring fees, of course, you can see that our clients' risk appetite is affecting recurring fees, and we still see them buying into mandates, but with a lower risk profile, so with lower margins and in that sense, it was helpful "In the third quarter, the transaction line compensated for some of that," he told Joumanna Bercetche of CNBC.

– Elliot Smith of CNBC has contributed to this report.

Correction: This story has been updated to accurately reflect the decline in the Bank's adjusted operating profit on its global assets management business.


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