UBS Profit Rises 27% as Wealth Inflows Hit $55.1 Billion

UBS announced on Wednesday that its third-quarter pretax profit increased by 27 percent to nearly $3.6 billion compared with the same period last year. The net profit for the quarter totaled $2.7 billion, a figure that aligned with analyst expectations. For shareholders and investors, these numbers indicate that the bank’s core operations generated stronger returns this quarter than in the preceding year, driven primarily by its wealth management division.

The surge in profitability was fueled by high demand for the bank’s global wealth management services. UBS reported net new assets of $55.1 billion by the end of the quarter. Additionally, the bank secured $12.5 billion in client commitments across both its wealth management and asset management sectors. These inflows suggest that clients continued to move funds into the bank despite the ongoing integration of Credit Suisse.

The bank’s financial resilience remains a point of focus. Its common equity tier 1 capital ratio, a metric used to measure solvency, stood at 14.7 percent, up from 14.4 percent in the previous quarter. In an earnings statement, UBS confirmed that the integration of Credit Suisse is firmly on track to be completed by the end of the year. The bank now projects cumulative cost savings of $13.7 billion from this process, which exceeds the previously anticipated $13.5 billion.

Tensions persist between UBS and the Swiss government regarding capital requirements. The dispute centers on proposals for tougher capital buffers designed to protect taxpayers from future banking crises and contagion from foreign subsidiaries. UBS is classified as systemically important to the Swiss economy. Last month, the Swiss Senate voted to require UBS to hold 90 percent of its Common Equity Tier 1 capital as backing for its foreign subsidiaries. This would require roughly $16 billion in additional shares, compared to the current level of about 45 percent.

UBS CEO Sergio Ermotti pushed back against the proposed increase. During an appearance on CNBC’s Squawk Box Europe, he stated that clients expect the bank to remain competitive. "90% would not, long-term, allow us to be a competitive player," Ermotti told CNBC’s Carolin Roth. "I'm very concerned about this development." The bank has indicated it prefers the figure to remain no higher than 50 percent.

In an earlier statement, Ermotti attributed the strong quarter to the benefits of UBS’ diversified global business model. He noted that the lender remains strategically committed to its diversified operations and its global and regional footprint. The bank’s performance underscores the continuing strength of its wealth management sector even as it faces regulatory hurdles in its home market.