UBS' Robust Net Client Inflows During Q3 2022 Indicate Moatiness

As expected, depressed market valuations continued to weigh on narrow-moat UBS’ results. Net profit of $1.7 billion for third-quarter 2022 was 24% below UBS’ net profit for the same quarter a year earlier, but it was comfortably ahead of the $1.5 billion consensus estimate of analysts polled by UBS. The continued strong net inflow of clients’ money into fee-generating assets managed by UBS was the main upside surprise in the results. We view the net inflows achieved during bearish market conditions as confirmation of UBS’ economic moat in its wealth and asset management businesses. After incorporating the latest results into our model, we increase our fair value estimate for UBS slightly to CHF 22.50/share from CHF 21.50/share previously. We maintain our narrow moat rating. With a 0.8 times price/fair value estimate we believe UBS continues to offer upside potential.