UBS Group AG released its third-quarter results on October 28, reporting an 8% year-on-year increase in net profit to US$2.69 billion, slightly below market expectations of US$2.74 billion.
Despite strong performance in wealth management and investment banking, with group operating profit growing nearly 27% year on year, income tax expenses surged to US$887 million from US$341 million a year earlier, offsetting part of the operating profit growth. UBS also stated that the integration of Credit Suisse remains on track and is expected to be completed by the end of 2026.
Operating Profit Up Nearly 27%, but Tax Expenses Surge 160% Year on Year
UBS posted a net profit of US$2.69 billion in the third quarter, up from US$2.48 billion a year earlier, representing growth of approximately 8.5%, but slightly below the market consensus of US$2.74 billion.
Total group revenue rose from US$12.76 billion a year earlier to US$13.35 billion, an increase of about 4.6%. Operating profit climbed from US$2.83 billion to US$3.59 billion, up approximately 26.9% year on year.
Operating profit grew notably faster than revenue, largely due to the higher cost base in the same period last year. In the third quarter of 2025, UBS bore significant expenses related to the Credit Suisse integration, which weighed on profits at that time. As these costs decreased, operating profit in the same period this year rebounded substantially.
However, a sharp increase in income tax expenses limited the growth of final net profit. UBS's third-quarter income tax expense reached US$887 million, up about 160% from US$341 million a year earlier, with the effective tax rate rising to 24.7%, more than double the prior-year level.
Consequently, although UBS's core business profitability improved markedly, net profit growth remained relatively limited and ultimately fell slightly short of market expectations.
Net Interest Income Up 22%, Wealth Management and Investment Banking Remain Strong
In terms of business structure, UBS's third-quarter growth was mainly driven by net interest income and its two core business divisions. Supported by rising global interest rates, the group's net interest income grew 22% year on year.
Meanwhile, wealth management revenue rose 8% and investment banking revenue increased 17%, both contributing to the group's revenue growth. Wealth management and investment banking are important revenue sources for UBS. The former primarily provides investment management and asset allocation services to high-net-worth clients, while the latter covers securities trading, financing and corporate financial services.
The simultaneous growth of both businesses indicates that UBS maintains strong operational performance in wealth management and capital markets, providing support for sustained profitability during the Credit Suisse integration.
Credit Suisse Integration Expected to Complete by Year-End, Q4 Trading Activity May Slow
UBS stated that the business integration following the acquisition of Credit Suisse remains on schedule and is expected to be completed by the end of 2026.
For the fourth quarter, UBS expects trading volumes across business divisions to decline compared with the third quarter, meaning revenue from businesses that rely partly on client trading activity may face quarter-on-quarter pressure.
However, the company expects global banking revenue to grow quarter on quarter, and net interest income is also expected to achieve low single-digit growth, providing some support for fourth-quarter performance.
Overall, UBS's third-quarter results present a picture of improved operating profit but limited growth in final earnings. Wealth management, investment banking and net interest income growth drove core business performance, while the sharp increase in income tax expenses caused net profit to fall slightly below market expectations.
As the Credit Suisse integration enters its final stage, investors will focus on whether declining integration costs can continue to translate into profit growth, as well as the impact of slower trading activity in the fourth quarter on revenue.
Comments