UBS beat profit forecasts with their Q3 results on Tuesday, coming in with a SFr 1.02bn ($1.13bn) of net profit.
In the absence of unauthorised gains to offset them, unauthorised (er) losses from the trading scandal cost the group SFr 1.85bn. All more or less as expected, and in a tough market environment (click to expand):
As can be seen in the chart in the upper right corner, UBS’ credit spreads, while wider over the third quarter, have outperformed those of other European banks. This, however, didn’t stop the Swiss bank from booking SFr 1.765bn from “gains” on its own credit deterioration.
In terms of real assets and actual cash, however, UBS has been wielding the cost-cutting axe with some success…
(Is that decrease in non-personnel costs down to not using colour printing? Sorry, wrong Swiss bank.)
.. and wealth management has genuinely benefited from the performance over peers, seeing net inflows:
While wealth management may be something of a bright spot, all has not been well in the investment bank, even when the unauthorised trading “incident”, own credit gain, and restructuring charges are backed out:
Breaking it up by division:
Within FICC, Macro did well year-on-year, with revenues of SFr 668m versus SFr 541m in the previous quarter. Credit, however, managed to go from SFr 401m in Q2 to a loss of SFr 156m in Q3 due to a “difficult environment”. Emerging markets also took a kicking, but they aren’t a huge part of FICC for UBS.
The obligatory European exposures slide (click to expand):
Thus adding UBS to the chorus of voices that would like it if Silvio got his house in order.
Finally, UBS kindly provides a time-series of their VaR numbers. For the group as a whole, guess which division is in pole position to potentially cause a rather large daily loss? (click to expand)
Impressive quarter-on-quarter increase in the investment bank, with the average going from SFr 75m to SFr 113m and the distribution spreading itself out considerably (max of SFr 219m in the most recent quarter). And no prizes for figuring out which division it was..
Related links:
UBS profits beat forecasts despite scandal - FT
UBS Profit Falls After Trading Scandal - NY Times DealBook
UBS warns of tough times as Q3 profit surprises – Reuters