UBS posts $2.7 billion profit, speeds up share buybacks

By Ariane Luthi

ZURICH, Oct 28 (Reuters) - UBS reported ‌on Wednesday a third-quarter ​net profit ​roughly in line with expectations and accelerated its share buyback program even as the bank remained concerned about new Swiss capital requirements.

Net profit at Switzerland's biggest bank came in at $2.69 billion, up 8% ‌year-on-year and compared with $2.71 billion expected as per a company-provided consensus forecast.

Based on underlying pretax profit, ⁠it was the first time UBS did not beat estimates in more than two years, Bank Vontobel analysts said.

UBS repurchased $1.8 billion of shares in ‌the quarter and plans to complete its ‌buyback program of $3 billion by February, rather than by the mid-2027 timeline it had announced previously.

The bank has conditioned the amount and pace of share buybacks on the outcome of a Swiss banking rules overhaul that follows the ​2023 collapse of Credit Suisse and its state-engineered emergency takeover by UBS.

"Overall a solid set of results, albeit focus will continue to be on any business implications from the new Swiss capital rules," Citi said.

Looking ahead, investor sentiment ⁠remains measured due to macroeconomic volatility, geopolitical tension and political uncertainty, UBS said.

A flurry of European banks are reporting earnings this week, including Deutsche Bank and ​BNP Paribas, with investors watching closely to see if they can sustain recent record profits.

HSBC sent a chill through the sector on Tuesday after it disappointed investor expectations with its revenue ​growth, sending shares in Europe's most valuable bank down.

INFLOWS IN ASIA ‌AND THE AMERICAS

UBS's performance was supported by net new assets of $55 billion in global wealth management, driven by inflows of $18 billion in Asia and $17 billion in the Americas.

Profitability in the Americas ⁠improved, with the profit-before-tax margin up by over 2 percentage points, UBS said.

The integration of former rival Credit Suisse is on track for completion by year-end, the bank added, with cumulative cost savings by end-2026 now expected at around $13.7 billion, up from around $13.5 billion.

Staff levels ⁠dropped by almost 1,500 full-time employees in the quarter as integration progressed. Employees at the bank are running more than 12,700 personal AI ​agents and the bank keeps investing in the technology, UBS said.

The bank's cost-income ratio dropped to 72.3% at the end of the third quarter from 77% a year earlier.

New capital rules for UBS are currently being debated in a Swiss parliamentary committee and expected to ‌reach the lower house floor in December. The Swiss upper house last month proposed rules that UBS suggested were unacceptable.

UBS's chairman has warned the bank would need to carefully consider ‌its future in Switzerland if capital requirements are too harsh, and some shareholders have called for UBS to leave Switzerland.

UBS hopes that ⁠parliament will reach a solution that supports Switzerland's financial ‌stability without imposing undue costs on ​UBS's shareholders, clients and employees, the bank said in its results presentation.

"UBS remains strategically committed to its diversified business model and its global and regional footprint," it said.

(Reporting by Ariane Luthi; Editing by ‌Muralikumar Anantharaman)

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