UBS targets super-rich to underpin future growth
Swiss banking group UBS said it would be targeting the world’s wealthiest people for future growth as it posted market-beating profits.
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Third-quarter pre-tax profits came in at 1.67bn Swiss francs, a 37% improvement on the same quarter a year ago and above analyst expectations. Operating income was up from SFR7.1bn at SFR7.3bn.
Year to date net profits were CHF4.04bn, up from CHF3.39bn last year.
Chief executive Sergio Ermotti said he was “proud” of what UBS had achieved, adding: “We are taking action to grow profits efficiently and UBS is strongly positioned to benefit from several secular growth trends.
“There is no doubt in my mind that we will continue to deliver superior and sustainable value for our shareholders, regardless of market conditions.”
UBS has four divisions: personal and corporate banking; asset management; investment banking; and global wealth management, which was created when UBS merged its US and international operations last year.
Ermotti has refocused the bank away from investment banking towards wealth management since becoming chief executive in 2011. The division reported a 3% rise in third-quarter pre-tax profits to SFR932m and continues to be UBS’s main growth driver going forward.
The bank told investors: “UBS remains strongly positioned to benefit from positive long-term secular growth trends, including global wealth creation and economic expansion in Asia-Pacific.”
The group is targeting 10%-15% pre-tax profits growth over 2019-2021 cycle for the division, with profits at the upper end of the target range. It will also target net new money growth of 2-4% per annum and at least 3% growth by 2021.
It added: “The strategic plan focuses on accelerating growth in key geographies, including the Americas and Asia-Pacific, as well as strengthening its leadership position in the ultra-high net worth segment. Expansion in the American ultra high-net worth segment alone is expected to contribute to significant new money over the next three years.”
Michael Hewson at CMC Markets said: "Despite these numbers the bank's share price has had an awful time of it of late, down over 30% from its peaks and at its lowest levels since the end of 2016, with Ermotti looking to revise the bank's financial targets in an attempt to stem the declines in the share price and shore up investor sentiment."