BASEL: In the third quarter of 2016, UBS (NYSE:UBS) (SWX:UBSN) delivered strong results with an adjusted1 profit before tax of CHF 1,300 million, up 33% year-on-year. Reported pre-tax profit was up 11% year-on-year to CHF 877 million. Net profit attributable to shareholders was CHF 827 million, with diluted earnings per share of CHF 0.22. Group annualized adjusted1 return on tangible equity was 10.1%. This performance was achieved despite sustained economic and geopolitical uncertainty, persistently low client activity and subdued primary market issuance.
As of 30 September 2016, the Group achieved CHF 1.5 billion of annualized net cost savings on a normalized cost base, an improvement from CHF 1.4 billion in the prior quarter, making progress toward the CHF 2.1 billion 2017 year-end target. UBS will continue to take steps to offset higher than expected regulatory costs. In the third quarter of 2016, expenses for provisions for litigation, regulatory and similar matters were CHF 419 million, including CHF 408 million in Non-core and Legacy Portfolio. While the prior year’s third quarter included a net tax benefit of CHF 1.3 billion, net tax expense for the third quarter of 2016 was CHF 49 million. This included a net write-up of deferred tax assets of CHF 424 million mainly driven by updated profit forecasts beyond 2016, offset by tax expenses related to the current year.
“We delivered a strong performance across our businesses, despite seasonality and continued macroeconomic, geopolitical and market headwinds. Our strong position allows us to focus on helping our clients navigate the current environment. We will continue to execute with discipline and manage risk and resources prudently.“ Sergio P. Ermotti, Group Chief Executive Officer 1 Refer to the “Adjusted results“ paragraph at the end of this news release.
UBS’s capital position remains strong, with a fully applied CET1 capital ratio of 14.0% and a fully applied CET1 leverage ratio of 3.45%. Risk-weighted assets (RWA) increased by CHF 3 billion from the prior quarter to CHF 217 billion, due to previously anticipated regulatory inflation. The fully applied leverage ratio denominator (LRD) decreased by CHF 21 billion to CHF 877 billion quarter-on-quarter, mainly driven by efforts to optimize balance sheet utilization.
