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Private banking lifts UBS growth
Haig Simonian, FT Syndication Service

ZURICH: UBS continued the momentum of strong bank earnings in the third quarter with consensus-beating figures that outshone many international peers.
Deutsche Bank unveiled recently record third-quarter results, while US investment bank Merrill Lynch saw last month third-quarter profit rise 49 per cent to a quarterly high of $1.4bn in what is traditionally a slow period of the year. Even fears over trading performance at JPMorgan Chase proved unfounded when it reported a 78 per cent increase in the quarter.
UBS now poses a tough benchmark for Credit Suisse, its smaller Swiss rival, which reported later.
Group net profits jumped 71 per cent to a new quarterly record of SFr2.77bn ($2.1bn) thanks to excellent conditions in UBS's three core businesses of private and investment banking and asset management. Costs remained well under control.
"The earnings were stronger than expected across the board," noted Mark Rubinstein at CSFB.
The robust quarter pushed up net earnings for the first nine months by 27 per cent to SFr7.54bn and prompted an upbeat outlook for the year. "Even though markets have softened somewhat since the end of the quarter, we look forward to closing what has already been one of our most successful years," said Clive Standish, UBS chief financial officer.
The bank said it would pursue big share buy-backs and indicated it could use gains from the recent disposals of Motor Columbus, the industrial group, and its small private banks for modest selective acquisitions.
The buoyant figures from the three core businesses were marred only by minor shortfalls in investment banking, where UBS failed to reflect the windfalls of some competitors more active in proprietary trading and commodities.
Mr Standish said that relative weakness had prompted a strategic review, with the possibility that UBS might push into areas such as emerging markets bond trading or securitisation.
However, he stressed expansion would come largely through selective hiring, rather than takeovers.
UBS was also hit by a surprise SFr100m provision for litigation in US wealth management. The bank said this reflected numerous cases, rather than an individual problem, but declined to give any details on legal grounds.
Private banking was again the main motor for growth, with record pre-tax profits of SFr1.17bn, and SFr31.lbn of net new money in the quarter. Investment banking also performed strongly, with strong equities markets boosting pre-tax earnings to SFr1.39bn. Advisory fees were particularly buoyant for a traditionally quiet quarter, helped by the bank's success in winning mandates for some of the year's leading deals.