A month has gone by since the last earnings report for UBS (UBS Quick QuoteUBS - Free Report) . Shares have added about 12.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is UBS due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

UBS Group AG Q3 Earnings Decline Y/Y on Higher Expenses, Revenues Up

UBS Group AG reported third-quarter 2023 net loss attributable to shareholders of $785 million. In the year-ago quarter it recorded net profit of $1.7 billion.

Results were affected by higher operating expenses along with a significant rise in credit loss expenses. However, a rise in total revenues, driven in part by the acquisition of Credit Suisse, was a supporting factor.

Performance of the Personal & Corporate Banking division was impressive. However, the Asset Management arm, Non-core and Legacy, the Investment Bank and Global Wealth Management segments did not perform well.

From third-quarter 2023 onward, the company has started reporting five business divisions, namely Global Wealth Management, Personal & Corporate Banking, Asset Management, the Investment Bank, and Non-core and Legacy. It also reports Group Items separately.

Revenues Improve, Expenses Rise

UBS Group AG’s total revenues increased 42% from the year-ago quarter to $11.7 billion.

Operating expenses jumped 96.8% year over year to $11.6 billion.

UBS Group AG reported total credit loss expenses of $306 million in the quarter against credit loss release of $3 million in the year-ago quarter.

Business Divisions’ Performance

Global Wealth Management’s third-quarter operating profit before tax was $1 billion, down 30.7% year over year. The fall was mainly due to a decrease in other income and a rise in operating expenses.

Asset Management’s operating profit before tax declined 77.9% year over year to $31 million. The dip was mainly caused by a rise in operating expenses.

Personal & Corporate Banking reported operating profit before tax of $997 million, significantly up year over year. The rise was driven by an increase in revenues.

The Investment Bank unit’s operating loss before tax was $230 million against operating profit of $447 million in the prior-year quarter. The downsise was due to a decline in total revenues from global markets and a rise in operating expenses.

Non-core and Legacy reported operating loss before tax of $1.9 billion in the reported quarter against operating profit of $52 million in the year-ago quarter.

Group items reported operating loss before tax of $255 million compared with $210 million a year ago.

Capital Position Worsens

Total assets decreased 2% from the previous-quarter end to $1.64 trillion.

UBS Group AG’s return on CET1 capital was (4%) as of Sep 30, 2023, compared with 15.5% as of Sep 30, 2022.

The risk-weighted assets escalated 75.9% year over year to $546.5 billion.

However, CET1 capital surged 76% year over year to $78.6 billion. As of Sep 30, 2023, UBS Group AG's invested assets were $5.37 trillion, up 44% year over year.

Outlook (Standalone Basis)

2023

The CET1 capital ratio is targeted at around 14%.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.