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(Sharecast News) - UBS Group reported a stronger-than-expected third-quarter profit on Wednesday, fuelled by a rebound in investment banking activity, robust asset inflows and the release of legal provisions linked to legacy cases.
Net profit rose 74% from a year earlier to $2.5bn, comfortably exceeding consensus forecasts of about $1.4bn, while underlying pre-tax profit reached $3.6bn.
The Zurich-based lender said performance was supported by a record third quarter for both its global banking and global markets divisions, with revenues up 52% and 14% respectively.
Global wealth management also saw an 11% year-on-year rise in transaction-based income, though pre-tax profit came in slightly below estimates.
Group invested assets climbed 4% sequentially to $6.9 trillion, with global wealth management attracting $38bn in new money and asset management surpassing $2trn in invested assets following $18bn of inflows.
Chief executive Sergio Ermotti said the results reflected "significant momentum in our core businesses and disciplined execution of our strategic priorities," adding that UBS's "balance sheet for all seasons remains strong, allowing us to invest in talent, technology, and capabilities."
The bank reported a Common Equity Tier 1 capital ratio of 14.8% and completed $1.1bn of share buybacks during the quarter, with a further $0.9bn planned in the fourth, keeping it on track to return $3bn to shareholders in 2025.
Earnings were also boosted by $668m in net litigation reserve releases following the resolution of cases tied to Credit Suisse's mortgage-backed securities and UBS's historic cross-border business in France.
UBS said it had now achieved $10bn of its targeted $13bn in cost savings from the Credit Suisse integration, a milestone reached one quarter ahead of schedule.
More than two-thirds of Swiss-booked client accounts have been migrated, and the integration of the asset management arm is substantially complete.
The bank continued to face legal and regulatory challenges, confirming plans to appeal a Swiss court ruling that deemed the 2023 writedown of $17bn in Credit Suisse AT1 bonds unlawful, a decision also contested by market regulator FINMA.
UBS said it would make no new provisions related to the case.
Meanwhile, it was assessing potential exposure from the bankruptcy of US auto parts supplier First Brands Group, which affects several UBS investment funds but not the group's balance sheet.
Looking ahead, UBS cautioned that deal activity could normalise after an exceptionally strong quarter and warned that "sentiment can shift quickly as confidence in the outlook is tested".
The bank pointed to macroeconomic headwinds including a strong Swiss franc, higher US tariffs, and the risk of a prolonged US government shutdown.
Nonetheless, Ermotti said UBS remains well positioned for long-term growth, highlighting strategic investments such as its application for a US national bank charter and expanded use of generative AI across the firm.
At 1021 CET (0921 GMT), shares in UBS Group were down 1.33% in Zurich at CHF 30.51.
Reporting by Josh White for Sharecast.com.