Organic growth to drive UBS' goal of US$3b Asia-Pac profit

Singapore

UBS, the world's largest wealth manager, is already seeing how long it would take for it to hit US$3 billion in full-year earnings from its Asia-Pacific operations, with 2020 earnings due to reach US$2 billion with ease.

Calling it a "purposeful" target without a timeline, UBS Asia-Pacific president Edmund Koh said in a media briefing on Wednesday that the results point to the strong organic growth from a rising Asia.

"I've always told the team that 'let's try and plan a world where it's three billion (dollars) in our (bottomline)'," said Mr Koh.

UBS in the Asia-Pacific posted a 92 per cent jump in nine-month profit before tax from a year ago to US$1.8 billion. Assets under management in the global wealth-management segment cracked the US$500-billion mark, about a year ahead of schedule.

Asia is now the largest regional contributor to group profit at UBS. As it is, the bank's Asia wealth franchise has aimed to close the current financial year on an all-time record.

As for earlier reported talks of a merger with Credit Suisse that may impact operations in this region, Mr Koh said UBS is not "actively" looking at speculated merger partners, even as the bank would not discount acquisitions.

"It is one thing going through a bad economy but another thing when you're in a bad economy and doing very well. Of course, when you're doing so well with all that Tier-1 capital, everybody will be looking at you and saying, 'what are you buying'," he said.

"We're happy with our organic growth, and we'll continue to drive the numbers up."

Mr Koh noted that in speaking with clients, large businesses from this part of the world have been advised to plan for a new normal in a post-Covid world.

"It will be a new, different world by quarter one next year," he said.

"The best lines I've had in my advice to them, or conversations, is not to look at pre-Covid numbers, but to take this opportunity to create a new need, create a new business line, and to create new expectations of their own financial bottomline," he said.

He noted that some capex-driven industries - including those in hospitality - would need more time to recover; those in industries such as healthcare and tech will grow strongly. Meanwhile, wealth-management clients are also keeping their powder dry ahead of the US elections.

Mr Koh said as well that he has not seen any significant fund movements to Singapore, despite the tensions in Hong Kong.

"I don't see any outflow from Hong Kong coming to Singapore," he said. So while there has been a slight slowdown in net new money in Hong Kong, these flows have not been picked up in Singapore as inflows.

The record third-quarter profit from this region was driven by a 24 per cent lift in operating income in the global wealth-management segment at US$705 million, with the percentage growth outpacing all other regions.

Cost-to-income ratio for the Asian global wealth-management operations stood at 63 per cent, the second-lowest after that of Switzerland at 62 per cent. Year-to-date net credit loss expenses have been "immaterial", the bank said.

Overall, UBS posted this week a 99 per cent jump in third-quarter profit. Net profit hit US$2.1 billion for the three months ended Sept 30, which beat expectations for US$1.56 billion, a Reuters report said.

UBS is also seeking joint venture partners in China to speed up the bank's penetration into the market.

"It is still on the dance floor," said Mr Koh on the progress of such talks. "I'm quite sure at some point in time we'll land up with the right partner."