UBS Rises As Quarterly Profit Pops 99%; Street Sees 15% Upside

Shares in UBS are soaring 6% as the Swiss bank’s quarterly profit jumped 99% fueled by “strong” client activity in global stock markets.

UBS’ (UBS) net income surged to $2.1 billion in the three months to September, blowing past analysts’ expectations of $1.557 billion. The bank’s global wealth management business reported an 18% increase in third-quarter pre-tax profit with a record quarter in Asia and the Americas driven by lending growth and higher client transaction-based income. Assets under management in the wealth business surged to a record $2.8 trillion.

Investment banking pre-tax profits saw a quarterly rise of 268% to $632 million, and the bank’s asset management division posted a 495% leap year-on-year. Meanwhile, personal & corporate banking pre-tax profit declined 13% year-on-year.

“Our third quarter results continue to demonstrate that our strategy is differentiating us as we continuously adapt and accelerate the pace of change,” said UBS CEO Sergio P. Ermotti. “Our ability to focus on clients and achieve such strong financial performance over the first nine months of this year speaks to this.”

The bank disclosed that it has accumulated $1 billion to be used for a cash dividend for next year’s payout and has a $1.5 billion capital reserve for potential share repurchases.

UBS said that the rebound of global markets and the effective crisis management measures in Switzerland have helped to offset some of the risk in its credit exposures.

Looking ahead, the wealth manager expects “credit loss expense in the fourth quarter of 2020 to remain markedly lower than in the first half of the year”. (See UBS stock analysis on TipRanks)

Shares in UBS have declined 6.6% this year, with analysts cautiously optimistic on the stock. The Moderate Buy consensus breaks down into 6 Buys, 5 Holds and 1 Sell. The $14.30 average analyst price target implies 15% upside potential over the coming year.