Swiss conglomerate UBS reported higher-than-expected third-quarter earnings as higher interest rates helped offset weaker client activity in its core asset management division. The bank reported a net profit of $1.73 billion for the reporting period, compared to analysts’ estimates of $1.57 billion of about $17.1 billion, while earnings declined in the investment banking division. The sudden hike in interest rates by the US Federal Reserve and the European Central Bank is giving financial institutions an opportunity to boost their lending income, helping to keep their plans to return capital to shareholders intact. However, international banks have seen their share prices and profits fall due to lower confidence, on the one hand, due to the Russian war in Ukraine and the energy crisis, and on the other hand, due to the slowdown in the Chinese economy. Swiss bank UBS said yesterday that share buybacks this year are likely to reach a value of around $5.5 billion.

Its chief executive, Ralph Hammers, has led a campaign to increase automation, cut leadership positions and expand the Swiss group’s presence in the US, where its business is also overshadowed by local competitors. He also faced a major setback in September when his bank announced it was pulling out of a deal to buy U.S. robo-adviser Wealthfront. UBS opened 2.7% higher on the Zurich Stock Exchange yesterday, up 7.73%. “The macroeconomic and geopolitical environment is becoming increasingly complex,” said Ralph Hammers, presenting the financial results. “Global uncertainty could also affect the level of customer activity in the fourth quarter,” he added.

At competing US banks, revenues and profits rose in most cases, beating analysts’ expectations. But with the prospect of a recession, they are bracing for higher credit reserves. JPMorgan Chase added $808 million to loan provisions, while Wells Fargo committed $784 million. Instead, UBS has finally posted CHF15 million ($15 million) in loan loss provisions in its retail and corporate banking division.