UBS Group AG has reported strong financial performance in the third quarter of 2024, with a net income of $1.4 billion and an underlying pretax profit of $2.4 billion. This brings the total pretax profit for the year to $7.1 billion, reflecting a return on CET1 capital of 9.2 percent.
The bank's underlying revenues have increased by 9 percent year-on-year, with assets under management rising significantly by 15 percent to reach a total of $6.2 trillion. The CET1 capital ratio remains solid at 14.3 percent.
UBS has successfully completed client account migrations in Luxembourg and Hong Kong, with plans for further migrations in Singapore, Japan, and Switzerland. The bank is also investing in technology enhancements, including the integration of Microsoft Copilot and its AI assistant, Red, to improve operational efficiency and client service.
Employee satisfaction remains high, with 84 percent of employees expressing pride in their association with the bank. UBS's current trading valuation presents an interesting scenario for investors. The bank's price-to-earnings (P/E) ratio stands at 42.49, but when adjusted for the last twelve months leading to the second quarter of 2024, this figure drops to a more reasonable 14.06. This adjustment suggests that UBS may be more attractively valued in light of its recent earnings performance.
The market capitalization of UBS is currently $100.45 billion, reinforcing its status as a leading player in the Capital Markets sector. The substantial revenue growth of 38.37 percent over the past twelve months aligns with the reported 9 percent year-on-year increase in underlying revenues. Furthermore, UBS's operating income margin of 19.95 percent indicates efficient operations, allowing the bank to generate strong profits despite global economic challenges.
Looking ahead, UBS aims to exceed pre-acquisition returns on capital by 2026, contingent upon regulatory assessments. The bank remains confident in achieving its long-term growth targets, emphasizing the importance of continued integration efforts to enhance client satisfaction and operational efficiency. UBS has faced some challenges, including lower cost savings this quarter due to increased variable compensation and negative foreign exchange effects. The CET1 capital ratio is expected to decline to 13.3 percent in the next report, which may raise concerns among investors. Additionally, the bank's Personal & Corporate Banking segment reported a 7 percent decrease in pretax profit, attributed to lower Swiss franc interest rates impacting lending opportunities and net interest margins.
Despite these challenges, UBS's positive outlook is supported by its strong capital position and ongoing share buybacks. The bank's commitment to maintaining dividend payments for 13 consecutive years underscores its dedication to shareholder returns, with a current dividend yield of 1.76 percent providing a steady income stream for investors. UBS's strategic initiatives and financial resilience position it well for future growth.