UBS Q3 Net Profit Jumps; Names Kirt Gardner Group CFO

(RTTNews) - Swiss financial services giant UBS AG (UBS) reported Tuesday a significant rise in its third-quarter net profit reflecting tax benefit while net interest income and net fee and commission income declined from the prior year.

Looking ahead, the company warned of ongoing underlying macroeconomic challenges and geopolitical issues, adding that the proposed changes to the too-big-to-fail regulatory framework in Switzerland will cause it substantial ongoing interest costs.

Separately, UBS announced the appointment of Kirt Gardner as Group Chief Financial Officer, succeeding Tom Naratil, who will be President Wealth Management Americas and President UBS Americas.

For the third quarter, UBS' net profit attributable to shareholders climbed 171 percent to 2.07 billion Swiss francs. Earnings per share were 0.54 franc, 170 percent higher than 0.20 franc a year ago.

The latest results included a net tax benefit of 1.30 billion francs, mainly related to a net upward revaluation of deferred tax assets, 592 million francs of net charges for provisions for litigation, regulatory and similar matters and 298 million francs of net restructuring charges.

UBS' total operating income increased 4 percent to 7.17 billion francs from a year ago. In the quarter; interest income dropped 4 percent from last year to 3.23 billion francs and net interest income dropped 1 percent to 1.85 billion francs. Net fee and commission income was down 4 percent to 4.11 billion francs while net trading income climbed 52 percent to 1.06 billion francs.

Looking ahead, for the fourth quarter, UBS expects to recognize net additional deferred tax assets or DTA of approximately 500 million francs.

Further, UBS has amended certain external performance targets and expectations for 2016 and future years in light of actual and forecasted changes in macroeconomic conditions and the announcement of a newly proposed too big to fail regulation.

The company said its adjusted cost/income ratio target remains 60 percent-70 percent, with a short-to-medium-term expectation of 65 percent-75 percent.

UBS expects to achieve an adjusted return on tangible equity in 2016 at approximately the same level as 2015, an adjusted RoTE of approximately 15 percent in 2017 and targets an adjusted RoTE of above 15 percent from 2018 onwards.

In the executive changes, Robert McCann will take on a new role as Chairman UBS Americas, following his decision to step down from his current roles as President Wealth Management Americas and President UBS Americas.

Tom Naratil will succeed McCann as President Wealth Management Americas and President UBS Americas. He is currently Group Chief Financial Officer and Group Chief Operating Officer.

Kirt Gardner, currently Chief Financial Officer of Wealth Management, will become Group Chief Financial Officer.

UBS has named Axel Lehmann, a director, as its new group Chief Operating Officer.

The company also announced that Group Chief Risk Officer Philip Lofts and President UBS Asia Pacific Chi-Won Yoon have decided to step down at the end of the year.

All changes are effective 1 January 2016.

On the NYSE, UBS shares gained 1.90 percent on Monday to settle at $20.41.