UBS Shares Rise After Strong Q3 Performance

Shares of UBS (SIX:UBSG) (NYSE:UBS) rose on Wednesday following a strong Q3 performance, with net profits nearly doubling consensus estimates, driven by a 7% increase in revenue and tight cost control.

At 4:25 am (0825 GMT), UBS was trading 3.1% higher at CHF 29.36.

The Global Wealth Management (GWM) unit’s invested assets were up 3%, while the Non-Core and Legacy (NCL) unit showed a faster-than-expected reduction in risk-weighted assets (RWAs) by $5 billion, now at $45 billion.

“Momentum is continuing into Q4 but UBS points to macro and election uncertainty. The CET 1 ratio came in lower than expected largely due to a timing effect, which is also partially offset by a reduced impact from B4 in 2025,” stated analysts at RBC Capital Markets.

UBS guided for a swifter run-off profile for these assets, projecting a reduction to $27 billion by 2026, which would be 5% of the group’s RWAs, dropping from previous estimates.

UBS’s CET 1 ratio was slightly below target at 14.3% due to accelerated amortization of regulatory adjustments, but excluding this, it aligns with the 14.9% consensus. The accelerated amortization impacted the CET1 ratio by 65 basis points, but the company plans to resume buybacks in 2025 and expects returns to exceed pre-acquisition levels by 2026.

Each of UBS’s major business units contributed to the strong quarter, with underlying pre-provision profit (excluding litigation) exceeding consensus by 14%.

In Global Wealth Management, higher invested assets and effective operating leverage led to a 13% outperformance, while Personal and Corporate Banking saw a 4% increase in underlying profit.

The Investment Bank surpassed expectations, exceeding street estimates by 55%, with Equities revenue up 33% year-over-year and FICC up 26%. Asset Management also exceeded expectations, supported by a $72 million net gain from disposals despite a slight cost increase.

In Q4, UBS expects a mid-single-digit decline in net interest income within GWM and a low-single-digit decrease in Personal and Corporate Banking. Despite these anticipated declines, analysts note that UBS’s Q3 performance was buoyed by strength in its core divisions.

GWM recorded a 5% rise in invested assets to $4.259 trillion, with net inflows of $24.7 billion, and fee-generating assets up by 5% sequentially. The Investment Bank saw a 13% year-over-year growth in Advisory, particularly strong in the APAC region.

While costs rose slightly in Q3, UBS’s headcount decreased by 1% at the group level, with a 2% drop in GWM advisors. The bank's total tangible net asset value (TNAV) per share was up 4% from consensus, reflecting a 7% year-over-year increase and a 5% sequential increase.

UBS's Q3 results demonstrate a balanced growth across divisions and steady cost discipline, positioning the firm favorably for upcoming quarters and setting a clear path toward targeted returns in 2026.

“While UBS’s ambition to continue buybacks in 2025 and 2026 remains, capital returns beyond 2025 will be subject to the assessment of any proposed new capital requirements,” noted analysts at BofA Securities.