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UBS overhauls i-bank as Q3 profit slides 16% YOY amid 'challenging environment'

UBS Group AG will realign its investment banking business to create more growth opportunities and drive its digital transformation as it reported lower third-quarter and nine-month results amid what it called a "challenging environment" dogged particularly by low interest rates.

The Swiss banking group will rename its corporate client solutions and investor client services divisions to global banking and global markets, respectively, effective Jan. 1, 2020. The new global markets business will cover equities and foreign exchange, rates and credit and offer three new products namely execution and platform, derivatives and solutions and financing.

In the fourth quarter, the Zurich-based bank expects to incur restructuring charges of roughly $100 million.

The group's third-quarter net profit attributable to shareholders fell to $1.05 billion from the year-ago $1.25 billion. Quarterly EPS was 28 cents, compared with 33 cents a year ago.

The bank recorded third-quarter return on equity of 7.7%, lower than the year-ago 9.7%.

Net interest income decreased year over year to $1.09 billion from $1.18 billion, so did net fee and commission income, to $4.41 billion from $4.47 billion. UBS' other income came in at $39 million, down from $101 million a year earlier.

The bank's investment banking business saw its pretax operating profit slip 62% year over year to $172 million from $453 million, so did the personal and corporate banking segment, where pretax operating profit decreased to $353 million from $390 million a year ago.

The flagship global wealth management business yielded pretax operating profit of $894 million, up from $864 million a year ago, while the asset management activities posted a pretax operating profit of $124 million, an increase from the year-ago $118 million. Meanwhile, pretax operating losses at the corporate center segment widened to $200 million from the year-ago $128 million.

UBS booked costs relating to depreciation and impairment of property, equipment and software of $432 million, up on a yearly basis from $310 million. General and administrative expenses totaled $1.31 billion, down from the year-ago $1.46 billion.

For the nine months to Sept. 30, UBS' attributable group net profit dropped to $3.58 billion from $4.20 billion a year ago. EPS for the first nine months was 95 cents, compared with $1.09 a year ago. ROE for the period was 8.9%, lower than 10.7% a year ago.

The group's common equity Tier 1 ratio stood at 13.1% as of Sept. 30, down from 13.3% as of June 30 and 13.5% a year ago.

UBS also said it is on the lookout for "opportunities that would leverage our technology capabilities, build on our strengths and focus resources on growth areas," including strategic partnerships and additional collaboration across business divisions, among others.

Regarding its Chinese operations, the group noted that it expects to receive approval to fully own UBS Securities Co. Ltd., in which it holds a 51% stake, by 2020. The date when the new measures take effect is yet to be clarified.