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UBS said on Tuesday it would set aside $2.5bn to return to shareholders next year as a surge in third-quarter profits and revenues confounded expectations that the pandemic would disrupt global lending. 

The Swiss bank — the world’s largest wealth manager — reported third-quarter profits attributable to shareholders of $2.1bn, up 99 per cent year on year. It recorded a 21.9 per cent return on tier one capital. 

Revenue for the quarter was $8.9bn, up 25 per cent from the third quarter of 2019, driven by a strong rise in trading revenues in investment banking and strong underlying performance in its core wealth management division. 

UBS said it had realised credit losses of just $89m in the three months to October, largely related to coronavirus — far less than the $201m in losses analysts had expected. 

The bank said it intended to pay the second instalment of its 2019 dividend in November. Under instruction from Swiss regulators, lenders in the country were forced to withhold half of their dividend distribution in April until the second half of the year, amid fears the economic effects of coronavirus would strain the global financial system. 

UBS said it intended to ramp up its return of capital to shareholders next year to make up for restrictions imposed in 2020. It has set aside $1bn this quarter for distribution of its April 2021 dividend, and has pooled a further $1.5bn already for buybacks next year. 

The consensus-beating results are the last for chief executive Sergio Ermotti, who is to step down as head of the bank on November 1, to be replaced by ING’s Ralph Hamers. 

Analysts had forecast a net profit of $1.55bn.

“Our third-quarter results continue to demonstrate that our strategy is differentiating us as we continuously adapt and accelerate the pace of change,” said Mr Ermotti. 

Revenue at UBS’ investment banking division rose 42 per cent year-on-year to $2.48bn, driving a 268 per cent rise in profits before tax to $632m. 

The figures are the best third-quarter results for the investment bank since 2012 and a vindication of one of Mr Ermotti’s key early decisions in assuming leadership of UBS to maintain its then beleaguered investment banking function. 

Revenues for UBS’ core global wealth management division were stable at $4.28bn, compared with $4.14bn in the same period in 2019. Profits before tax at the division nevertheless rose 18 per cent to $1bn. 

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