Swiss banking group UBS's third-quarter operating profits fell by almost two thirds as European Central Bank regulatory stress tests loomed.
The Zurich-based behemoth also delayed a key target by one year as its level of off-balance sheet, risk-weighted assets were higher than its targets.
UBS's third-quarter adjusted profit before tax of 484m Swiss francs was down 65% on the same period last year and down 51% on the previous quarter in what the company said was a "challenging environment".
UBS said it remained "the best-capitalized bank in its peer group" and that its Basel III fully applied Common Equity Tier 1 (CET1) ratio increased to 11.9%" the group said, referring to the amount of core equity balancing its total risk-weighted assets (RWA).
However, the group's Basel III fully applied RWA was down 8.4% to 219bn Swiss francs, below the bank's 2013 and 2015 targets.
Group Chief Executive Officer Sergio Ermotti said: "Our results this quarter provide more evidence that our business model works in a variety of market conditions. One year into the acceleration of our strategy we are ahead of plan on execution."
However, the bank said that the Swiss regulator, Finma, had at the end of the quarter demanded it hold more capital temporarily through a temporary 50% add-on to its operational risk-related RWA.
Starting in the fourth quarter of 2013, UBS expected this temporary add-on to result in additional operational risk-related RWA of approximately 28bn Swiss francs, which it estimated would reduce its fully applied Basel III CET1 ratios by 130 basis points.
However, as UBS expected the exercise of the Swiss National Bank's 'StabFund' stability fund option would add around 100 basis points to its fully applied ratio in the fourth quarter, creating a net effect of a 30 point reduction.
Source: LiveCharts
The Zurich-based behemoth also delayed a key target by one year as its level of off-balance sheet, risk-weighted assets were higher than its targets.
UBS's third-quarter adjusted profit before tax of 484m Swiss francs was down 65% on the same period last year and down 51% on the previous quarter in what the company said was a "challenging environment".
UBS said it remained "the best-capitalized bank in its peer group" and that its Basel III fully applied Common Equity Tier 1 (CET1) ratio increased to 11.9%" the group said, referring to the amount of core equity balancing its total risk-weighted assets (RWA).
However, the group's Basel III fully applied RWA was down 8.4% to 219bn Swiss francs, below the bank's 2013 and 2015 targets.
Group Chief Executive Officer Sergio Ermotti said: "Our results this quarter provide more evidence that our business model works in a variety of market conditions. One year into the acceleration of our strategy we are ahead of plan on execution."
However, the bank said that the Swiss regulator, Finma, had at the end of the quarter demanded it hold more capital temporarily through a temporary 50% add-on to its operational risk-related RWA.
Starting in the fourth quarter of 2013, UBS expected this temporary add-on to result in additional operational risk-related RWA of approximately 28bn Swiss francs, which it estimated would reduce its fully applied Basel III CET1 ratios by 130 basis points.
However, as UBS expected the exercise of the Swiss National Bank's 'StabFund' stability fund option would add around 100 basis points to its fully applied ratio in the fourth quarter, creating a net effect of a 30 point reduction.
Source: LiveCharts
