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UBS Q3 Profit Declines, Sees Positive Momentum; Stock Up

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Swiss banking giant UBS Group AG (UBS) reported Tuesday lower profit in its third quarter mainly with weak profit in Investment Bank segment and lower net interest income. Looking ahead, the bank noted that geopolitical tensions and trade disputes continue to impact investor confidence. However, positive momentum toward resolving issues would likely improve confidence and the economic outlook. UBS shares were gaining around 2 percent in the early morning trading in Switzerland.

The bank expects that net interest income will be adversely affect by low and persistent negative interest rates and expectations of further monetary easing. However, the company's regional and business diversification as well as certain actions it is taking will help to mitigate these headwinds. Recurring revenues should also benefit from higher invested assets.

The bank further expects that stimulus measures and easing of monetary policy by central banks may help to mitigate slowing global economic growth over the medium term.

Sergio Ermotti, Group Chief Executive Officer, said, "We delivered solid results generating attractive returns, considering the market conditions. We continue to take actions to grow profitability and further capitalize on the strengths of our diversified franchise, delivering long-term value for our clients and shareholders."

For the third quarter, net profit attributable to shareholders was $1.05 billion, down 16.2 percent from last year's $1.25 billion. Earnings per share declined 14 percent to $0.28 from the prior year's $0.33.

Operating profit before tax was $1.35 billion, down 21 percent from $1.70 billion a year ago. Adjusted Profit before tax decreased 18 percent to $1.46 billion.

Adjusted profit before tax in the Global Wealth Management segment dropped 2 percent, in Personal & Corporate Banking fell 10 percent and in Investment Bank, it declined 59 percent. However, adjusted profit grew 6 percent in Asset Management segment.

For the quarter, operating income declined 5 percent to $7.09 billion from last year's $7.43 billion.

Net interest income for the quarter dropped 8 percent to $1.09 billion from $1.18 billion in the previous year. Net fee and commission income dropped 1 percent from last year to $4.41 billion.

Total operating expenses for the quarter was flat at $5.74 billion.

In Switzerland, UBS shares were trading at 11.67 Swiss francs, up 2 percent.

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