UBS Group AG's net interest income in Q3 decreased by 15% year-on-year, but both total revenue and net profit exceeded expectations | Financial Report Insights

Thanks to cost reductions and strong loan income, UBS Group AG's third-quarter performance exceeded expectations across the board. On Wednesday, October 30th, UBS Group AG released its third-quarter financial report, which showed that the bank's total revenue for the quarter was $12.33 billion, higher than the market's expected $11.46 billion, representing a 5.4% increase from the same period last year. Net profit was $1.43 billion, nearly double the analysts' expected $783.3 million, a significant improvement from the $715 million loss in the same period last year. In addition, the bank's net interest income reached $1.79 billion, a 15% year-on-year decrease but higher than the expected $1.48 billion. Earnings per share were $0.43, also exceeding market expectations. UBS Group AG CEO Sergio Ermotti stated in a release that the strong performance for the quarter was reported against a backdrop of "high volatility and turmoil" in the market. The bank also warned: "The U.S. election and geopolitical tensions have brought uncertainty to the macroeconomic outlook, with interest income expected to decline in the fourth quarter, while costs are expected to rise seasonally." Currently, UBS Group AG is advancing the integration work of its former competitor Credit Suisse, including IT system integration and the challenging task of migrating clients. Earlier this month, Reuters reported that the initial migration of clients from Credit Suisse to UBS will take approximately 18 months. The bank has successfully completed the first wave of client account migrations. Furthermore, some analysts have pointed out that due to political scrutiny in Switzerland over crises, the bank's future capital levels will face high uncertainty, with capital requirements potentially increasing by as much as $25 billion. Previously, UBS incurred losses for two consecutive quarters after acquiring Credit Suisse and is expected to return to profitability in the first quarter of 2024. With the continuous recovery of profitability, the bank's stock price has risen by approximately 8% year-to-date. UBS stated that due to the gradual elimination of regulatory benefits related to the acquisition of Credit Suisse, its Common Equity Tier 1 (CET1) capital adequacy ratio decreased by 0.6% to 14.3%. However, the bank also stated that this move did not affect its approximately $1 billion share buyback plan to be completed by the end of the year. However, its capital return plan after 2025 will be affected by Swiss regulatory reforms