UBS Group AG got a boost from rich Asian clients in a quarter hit by a poor result at the investment bank and lower income from lending as interest rates have languished.
The key wealth management unit added $15.7 billion new money in the three months through September, most of that from Asia, helping lift assets overseen for the affluent to a record $2.5 trillion, UBS said Tuesday. While profit beat analysts’ estimates, UBS said it will book a roughly $100 million charge in the fourth quarter to restructure the securities unit, and warned that lower interest rates will continue to squeeze income.
“Market conditions in the last few quarters have been very challenging,” Chief Executive Officer Sergio Ermotti said in an interview with Bloomberg TV. That’s particularly true for the investment bank, which is “much more skewed towards Europe and Asia” than the U.S.
Ermotti is seeking to turn the corner after a year marred by huge legal fines, questions about succession planning and a slump in the share price. In August, he shook up the management board, hiring former Credit Suisse Group AG banker Iqbal Khan to co-run the wealth management unit and positioning him as a potential successor. But Khan’s start at UBS was overshadowed by a spying scandal that exposed a deep rift with his former boss.
UBS was one the first banks to pivot away from investment banking and toward wealth management after the financial crisis, becoming a model for rivals including Credit Suisse. Still, increasing competition for rich clients, negative interest rates and a slowing economy are putting pressure on that business. UBS said in August that it would expand a policy of charging affluent clients for excess cash holdings. Clients will start feeling the impact on Nov. 1 when the policy comes into effect.