Analyst Note| Niklas Kammer, CFA |
Narrow-moat UBS reported profits before tax of $2,729 million, 15% ahead of the $2,356 million consensus estimate collected by the group itself. The good performance is primarily explained by a strong performance in its investment bank, which saw operating income increase 28%. Higher revenue from equity derivatives, rates and foreign exchange all contributed positively and were only slightly offset by weaker capital market financing revenue. Other segments fell short of consensus estimates. Operating expenses came in at $6,634 million, 4% above what the group reported in the year-ago period. In sum, the group reported a strong return on common equity Tier 1 capital of 19.0%, ahead of its recently lifted medium-term guidance between 15% and 18%. We maintain our fair value estimate of CHF 21.50 per share.