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UBS Q3 Earnings Decline Y/Y on Lower Revenues, Costs Dip
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UBS Group AG (UBS - Free Report) reported third-quarter 2022 net profit attributable to shareholders of $1.73 billion, down 37.6% from the prior-year quarter.
The company’s performance was affected by a fall in revenues and a decline in total net credit loss releases. Nonetheless, operating expenses decreased from the prior-year quarter.
Performances of Asset Management, Global Wealth Management, Personal & Corporate Banking and Investment Bank divisions were disappointing in the quarter.
Total Revenues & Expenses Down
UBS Group AG’s total revenues decreased 9.6% to $8.24 billion from the prior-year quarter.
Operating expenses decreased 5.6% to $5.91 billion in the third quarter. The decrease was largely due to a decline in personnel expenses.
UBS Group AG reported a total net credit loss release of $3 million in the quarter compared with $14 million witnessed in the year-ago quarter.
Business Divisions’ Performance
Global Wealth Management’s third-quarter operating profit before tax was $1.43 billion, down 4% year over year. The decline was due to a fall in transaction-based income and recurring net fee income.
Asset Management’s operating profit declined 34% to $140 million in the third quarter of 2022. The fall was mainly due to a decline in total revenues.
Personal & Corporate Banking reported an operating profit before tax of $442 million, down 8% year over year. The decrease was mainly due to a decline in revenues.
The Investment Bank unit’s operating profit before tax was $447 million, down 47% from the prior-year quarter’s $837 million mainly on a decline in total revenues in the global banking business arm.
Group Functions incurred an operating loss before tax of $158 million in the reported quarter compared with a loss of $180 million in the year-ago quarter.
Capital Position Deteriorates
The total assets decreased marginally to $1.11 trillion from the previous quarter. Common Equity Tier 1 (CET1) capital declined marginally to $44.66 billion. As of Sep 30, 2022, UBS Group AG's invested assets declined 5.3% to $3.7 trillion from the prior quarter. Also, UBS Group AG’s return on CET1 capital was 14.4% as of Sep 30, 2022, compared with 14.9% as of Sep 30, 2021.
Nonetheless, risk-weighted assets declined 1.6% to $310.6 billion from the prior quarter.
Capital Deployment Activities Encouraging
In the quarter, the company repurchased $1.02 billion of common stock under its 2022 share repurchase program.
Our Take
UBS’s business divisions did not perform well in the quarter. Nonetheless, UBS Group AG continues to undertake initiatives to digitalize its operations and serve clients better in the long run.
Heightened regulatory supervision and unsustainable capital deployment activities due to its fluctuating quarterly performance are concerning.
Hancock Whitney Corporation’s (HWC - Free Report) third-quarter 2022 earnings of $1.55 per share were in line with the Zacks Consensus Estimate. The bottom line rose 6.9% from the prior-year quarter’s adjusted earnings of $1.45.
Results benefited from higher net interest income, a rise in the loan balance and increasing rates. However, lower non-interest income mainly due to rising mortgage rates was the undermining factor. Higher adjusted expenses and a rise in provisions were other headwinds for HWC.
Washington Federal’s (WAFD - Free Report) fourth-quarter fiscal 2022 (ended Sep 30) earnings of $1.07 per share handily surpassed the Zacks Consensus Estimate of 91 cents. The figure reflects a year-over-year jump of 48.6%.
Results were primarily aided by higher rates, robust deposits and improving loan balances, which drove the net interest income. However, an increase in expenses, a fall in total other income and higher provisions were headwinds for WAFD.
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UBS Q3 Earnings Decline Y/Y on Lower Revenues, Costs Dip
UBS Group AG (UBS - Free Report) reported third-quarter 2022 net profit attributable to shareholders of $1.73 billion, down 37.6% from the prior-year quarter.
The company’s performance was affected by a fall in revenues and a decline in total net credit loss releases. Nonetheless, operating expenses decreased from the prior-year quarter.
Performances of Asset Management, Global Wealth Management, Personal & Corporate Banking and Investment Bank divisions were disappointing in the quarter.
Total Revenues & Expenses Down
UBS Group AG’s total revenues decreased 9.6% to $8.24 billion from the prior-year quarter.
Operating expenses decreased 5.6% to $5.91 billion in the third quarter. The decrease was largely due to a decline in personnel expenses.
UBS Group AG reported a total net credit loss release of $3 million in the quarter compared with $14 million witnessed in the year-ago quarter.
Business Divisions’ Performance
Global Wealth Management’s third-quarter operating profit before tax was $1.43 billion, down 4% year over year. The decline was due to a fall in transaction-based income and recurring net fee income.
Asset Management’s operating profit declined 34% to $140 million in the third quarter of 2022. The fall was mainly due to a decline in total revenues.
Personal & Corporate Banking reported an operating profit before tax of $442 million, down 8% year over year. The decrease was mainly due to a decline in revenues.
The Investment Bank unit’s operating profit before tax was $447 million, down 47% from the prior-year quarter’s $837 million mainly on a decline in total revenues in the global banking business arm.
Group Functions incurred an operating loss before tax of $158 million in the reported quarter compared with a loss of $180 million in the year-ago quarter.
Capital Position Deteriorates
The total assets decreased marginally to $1.11 trillion from the previous quarter. Common Equity Tier 1 (CET1) capital declined marginally to $44.66 billion. As of Sep 30, 2022, UBS Group AG's invested assets declined 5.3% to $3.7 trillion from the prior quarter. Also, UBS Group AG’s return on CET1 capital was 14.4% as of Sep 30, 2022, compared with 14.9% as of Sep 30, 2021.
Nonetheless, risk-weighted assets declined 1.6% to $310.6 billion from the prior quarter.
Capital Deployment Activities Encouraging
In the quarter, the company repurchased $1.02 billion of common stock under its 2022 share repurchase program.
Our Take
UBS’s business divisions did not perform well in the quarter. Nonetheless, UBS Group AG continues to undertake initiatives to digitalize its operations and serve clients better in the long run.
Heightened regulatory supervision and unsustainable capital deployment activities due to its fluctuating quarterly performance are concerning.
UBS Group AG Price, Consensus and EPS Surprise
UBS Group AG price-consensus-eps-surprise-chart | UBS Group AG Quote
Currently, UBS Group AG carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Hancock Whitney Corporation’s (HWC - Free Report) third-quarter 2022 earnings of $1.55 per share were in line with the Zacks Consensus Estimate. The bottom line rose 6.9% from the prior-year quarter’s adjusted earnings of $1.45.
Results benefited from higher net interest income, a rise in the loan balance and increasing rates. However, lower non-interest income mainly due to rising mortgage rates was the undermining factor. Higher adjusted expenses and a rise in provisions were other headwinds for HWC.
Washington Federal’s (WAFD - Free Report) fourth-quarter fiscal 2022 (ended Sep 30) earnings of $1.07 per share handily surpassed the Zacks Consensus Estimate of 91 cents. The figure reflects a year-over-year jump of 48.6%.
Results were primarily aided by higher rates, robust deposits and improving loan balances, which drove the net interest income. However, an increase in expenses, a fall in total other income and higher provisions were headwinds for WAFD.