(Bloomberg) --

UBS Group AG’s investment bank capitalized on the surge in deal-making sweeping the globe as the worst of the pandemic recedes, while under-performing U.S. peers in equities and fixed-income trading.

The Swiss bank saw earnings from advising companies on mergers and acquisitions surge 78%, while equities revenues -- which accounts for more than two-thirds of investment bank business -- increased 24% when excluding a one-off gain from the third quarter last year. That compared to an average 35% increase across U.S. banks. 

UBS also reported a 32% decrease in fixed-income trading revenue, a steeper decrease than the U.S. banks. That put UBS firmly at the bottom of the pack along with Morgan Stanley and JPMorgan Chase & Co. in terms of trading performance, though the business is about a quarter of the size of UBS’s equities unit. 

Equities revenues were driven primarily by equity derivatives, cash equities and prime brokerage. The bank gained market share in cash equities in Asia Pacific, driven by U.S. institutional activity trading into Asia around the volatility of recent months, Chief Financial Officer Kirt Gardner said.

UBS also did more prime brokerage business, specifically in prime financing, but without adding risk capital to the investment bank, Gardner said. Crosstown rival Credit Suisse Group AG reduced its prime brokerage by more than a third after it took a $5.5 billion hit to profit from the collapse of Archegos Capital Management. 

UBS’s business advising on initial public offerings and dealmaking was driven by mergers and acquisitions activity that helped fuel record profits across Wall Street and led to an unusual amount of activity for what is typically a slower season for deal-makers. Capital markets activity was up 4%, driven by equity raises. 

The bank warned that client activity would be lower in the fourth quarter given persistent economic, social and geopolitical tensions. Recent policy changes in China and its recovery from the pandemic could also affect both client activity levels and asset prices, the banks said.

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