UBS Stock Up On Higher Q3 Profit; Net Interest Income Dips

(RTTNews) - Shares of UBS Group AG (UBS) were gaining around 2 percent in the morning trading after the Swiss banking giant reported Friday higher profit in its third quarter on the back of improved Global wealth management performance. Net interest income, meanwhile, dropped from last year.

Looking ahead, the company said it expects the global economic recovery to strengthen further, but geopolitical tensions and macroeconomic uncertainty still pose risks to client sentiment. In particular, high asset prices, uncertainty over central bank balance sheet and interest rate policies, seasonality factors and the persistence of low volatility may continue to affect overall client activity.

The company added that low and negative interest rates, particularly in Switzerland and the eurozone, put pressure on net interest margins.

Sergio Ermotti, Group Chief Executive Officer, said, "We again saw good results across our business divisions with Asia Pacific as an important driver of profitable growth. We remain focused on disciplined execution and creating long-term value for our shareholders."

In its third quarter, UBS' net profit attributable to shareholders climbed 14 percent to 946 million Swiss francs from last year's 827 million francs. Earnings per share grew to 0.25 franc from 0.22 franc last year.

Reported profit before tax increased 39 percent from last year to 1.22 billion francs and adjusted profit before tax grew 16 percent to 1.51 billion francs.

Global wealth management adjusted profit before tax rose 4 percent to 1.04 billion francs, with growth in all revenue lines. The results reflected higher invested asset levels and higher short-term US dollar interest rates, as well as further progress on mandate penetration and loan growth.

Asset Management adjusted profit before tax increased 11 percent, and the Investment Bank delivered 3 percent adjusted profit before tax growth on continued strong Corporate Client Solutions results.

Total operating income for the quarter was 7.15 billion francs, higher than 7.03 billion francs a year ago.

Net interest income, meanwhile, declined 2 percent to 1.74 billion francs. Net interest income after credit loss expense dropped 1 percent to 1.75 billion francs. This was offset by net fee and commission income, which grew 5 percent to 4.24 billion francs.

As of September 2017, the company achieved 1.9 billion francs of annualized net cost savings and is on track to achieve its 2.1 billion francs target by the end of 2017.

Further, UBS noted that it was confirmed as Diversified Financial Services and Capital Markets industry group leader by Dow Jones Sustainability Index for third year running.

In Switzerland, UBS shares were trading at 17.47 francs, up 1.51 percent.