UBS Group AG (NYSE: UBS) rose over 5.34% in pre trading session on Tuesday as on the strength of rising rates and cost discipline, the company had a strong quarter, allowing the Swiss bank to confirm a plan to return almost $5.5 billion to investors this year.
After UBS revealed that net income for the three months ending in September was $1.73 billion, against analyst projections of $1.57 billion, shares increased to their highest level since June. While customer inflows of $17.1 billion increased the wealth management unit’s loan revenue, investment banking revenue declined.
Banks are benefiting from an increase in loan revenue as a result of central banks’ responses to inflation in the US and Europe, which is enabling them to keep up their ambitious dividend and repurchase plans even as the prognosis for the economy worsens. Nevertheless, the oil crisis, Russia’s conflict in Ukraine, and China’s slowing economy all hurting equities and deal-making revenue for global banks.
In order to compete with local rivals in the US, UBS Chief Executive Officer Ralph Hamers is spearheading initiatives to increase automation, reduce managerial ranks, and increase the lender’s presence there. When the bank revealed in September that it was abandoning plans to acquire US robo-advisor Wealthfront, he suffered a significant blow.
As of 1:17 p.m. in Zurich, UBS gained as much as 6% and was trading for 16.02 Swiss francs. The bank added specificity to its earlier projection of more than $5 billion on Tuesday by stating that share buybacks should total about $5.5 billion this year.
The macroeconomic and geopolitical climate has gotten more complicated, according to Hamers, who made this claim in the results announcement on Tuesday. The fourth quarter customer activity levels may be impacted by the general unpredictability.
Hamers argued that the $1.4 billion Wealthfront transaction, which was meant to propel the bank into a larger, digital wealth management area, hadn’t had an impact on the bank’s overall expansion plan for the US. The withdrawal in September came after a collapse in tech equities that made the bank’s prior value seem unfavorable.
In an interview with Manus Cranny on Bloomberg Television, Hamers asserted that “a change in tactics is certainly not a change in strategy.” “The aim was always to develop organically, and the options you can look at in terms of speeding your organic plans,” the author said.