Finance

UBS confirmed to CNBC that it is offering additional tier 1 securities, but did not comment on the details of the contracts and said it will provide additional information when the offering is complete.
The wipeout of $17 billion of Credit Suisse AT1 bonds, as part of the rescue deal brokered by Swiss authorities in March, caused uproar among bondholders.

Fabrice Coffrini | Afp | Getty Images

UBS on Wednesday began selling Additional Tier 1 (AT1) bonds — which were at the heart of controversy during its emergency rescue of Credit Suisse — for the first time since completing the takeover.
The Swiss banking giant is marketing two tranches of U.S. dollar AT1 bonds, a non-call five-year offering around a 10% yield and a non-call 10-year offering around 10.125%, according to LSEG news service IFR. Non-call bonds are bonds that only pay out at maturity.

UBS confirmed to CNBC that it is offering additional tier 1 securities, but did not comment on the details of the contracts and said it will provide additional information when the offering is complete.
The wipeout of $17 billion of Credit Suisse AT1 bonds, as part of the rescue deal brokered by Swiss authorities in March, caused uproar among bondholders and continues to saddle the Swiss government and regulator with legal challenges.
AT1 bonds are considered a relatively risky form of junior debt and are often owned by institutional investors. They were introduced in the aftermath of the 2008 financial crisis as regulators looked to divert risk away from taxpayers and boost the capital held by financial institutions to protect against future crises.

Fitch on Wednesday assigned the new AT1 notes a “BBB” rating, four notches below UBS Group’s overall viability rating of “A,” with two notches for “loss severity given the notes’ deep subordination” and two for “incremental non-performance risk.”
“UBS’s new AT1 notes will contain a permanent write-down mechanism at issue. However, subject to approval by UBS Group AG’s 2024 AGM, the permanent write-down mechanism will be replaced by an equity conversion mechanism from the date of the AGM, which will bring the terms in line with other European markets,” the ratings agency said.
“The conversion feature would mean that, if approved by the AGM, the notes would be converted into a pre-defined volume of share capital of UBS Group AG if the latter’s common equity Tier 1 (CET1) ratio falls below a 7% trigger, or if a viability event is declared by FINMA [Swiss Financial Market Supervisory Authority].” More

China’s truck industry is finding more reasons to buy vehicles with assisted-driving technology.
One broad transformation is that the trucking industry in China is changing from one in which individual drivers dominated, to one with fleets holding the majority share, said Gui Lingfeng, principal at Kearney Strategy Consultants.
“In terms of customers, there is a sort of a counter-cyclical effect,” driver-assist truck startup Inceptio CEO Julian Ma said in an interview in late August. “The economy is getting tighter so the cost saving motivation is getting stronger not weaker that makes our customers more anxious to use our products.”

People attend a launch ceremony of Inceptio’s autonomous driving system on March 10, 2021 in Shanghai, China.
Huanqiu.com | Visual China Group | Getty Images

BEIJING — China’s truck industry is finding more reasons to buy vehicles with assisted-driving technology.
It’s a critical step toward monetization in a nascent business that’s drawn many investor dollars, with relatively little to show for it so far.

One broad transformation is that the trucking industry in China is changing from one in which individual drivers dominated, to one with fleets holding the majority share, said Gui Lingfeng, principal at Kearney Strategy Consultants.
He pointed out that five years ago, fleet operators only had about 20% of the Chinese trucking market. Today it’s at 36%, and projected to reach 75% in 2025, he said.
The companies trying to sell trucks to fleet operators are including driver-assist tech as a way to make the vehicles more attractive, Gui said.

That early tech integration gives truck manufacturers an edge on the amount of data they can collect — for training autonomous driving algorithms, he said.
In addition, Chinese authorities require all newly manufactured trucks since 2022 to come with basic driver-assist tech for warning against forward collision and lane departure, Gui said.

Chinese driver-assist trucking startup Inceptio claims it already has more than 650 trucks operating in China — mostly for logistics customers — and covered more than 50 million kilometers (31 million miles) in commercial operations.

“The economy is getting tighter so the cost saving motivation is getting stronger not weaker that makes our customers more anxious to use our products

Inceptio, CEO

Inceptio develops the driver-assist tech system, and works with original equipment manufacturers (OEMs) for mass production.
“In terms of customers, there is a sort of a counter-cyclical effect,” Inceptio CEO Julian Ma said in an interview in late August. “The economy is getting tighter so the cost saving motivation is getting stronger, not weaker — that makes our customers more anxious to use our products.”

Express delivery customers

China’s logistics companies have seen enormous growth over the last several years, thanks to the rise of e-commerce. That’s led to price wars, amid slowing slowing economic growth.
Industry giant SF Holdings reported a 5.1% drop in operating revenue to 189 billion yuan ($25.97 billion) in the first three quarters of the year, including a 6.4% year-on-year decline in the third quarter alone.
But vehicle upgrade cycles can support continued truck sales.
Truck operators typically replace the vehicles every four to five years, Ma said. “In China there are around 7 million heavy duty trucks. Even if the market has zero growth, on the yearly basis there is between 1.2 to 1.5 million new sales.”
The startup claims its trucks cost about 5% less than traditional options, on top of safety and environmental benefits.

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Already, an average of around 95% or more of a thousand-kilometer truck drive is handled by the computer, meaning the driver is mostly in standby mode, Ma said. “So the workload is much reduced.”
Ma said Inceptio’s focus over the next three years is on cost-sensitive customers, such as in logistics. He expects driver-assist features will dominate for the next few years, with 2028 the most optimistic scenario for the commercial deployment of fully driverless trucks.
Being able to remove drivers completely will result in the most cost savings for truck operators.

Platooning

Other startups are testing out different forms of driver-assist trucks in China.
Kargobot, backed by ride-hailing giant Didi, operates more than 100 autonomous-driving trucks between Tianjin, near Beijing, and the northern province of Inner Mongolia.
Many of those trucks operate via what’s called platooning — having a human driver sit in the front vehicle and having two or three trucks follow behind in fully self-driving mode, with no human staffer inside.
Kargobot CEO Junqing Wei envisions that in the next decade or two, a network of hubs on the edge of cities, connected by highways on which self-driving trucks transport products. That’s according to his remarks in October at CNBC’s East Tech West conference in the Nansha district of Guangzhou, China.

Waiting to prove an inflection point

Analysts at Yole Intelligence are closely watching whether robotruck companies can make good on production and delivery goals set for the next two years.
It’s a $2 trillion market, of which China accounts for about $650 billion to $750 billion and the U.S. slightly more than that, said Hugo Antoine, technology and market analyst, computing and software, at Yole Intelligence, which is part of Yole Group.
“This is the reason why we have many investors invest in this market,” he said. “Because if you have one percent or two percent of this market it is huge.”
However, it remains unclear how quickly regulators will allow fully driverless trucks on most roads, even if operators want to buy them.
“Even when the industry is technically ready, I think in any part of this world the transportation regulator will take another year or even two years, to validate the data and have their own testing before they can issue the driverless license,” Inceptio’s Ma said. More

Chicago Fed President Austan Goolsbee believes there is still a chance for a soft landing.
“Because of some of the strangeness of this moment, there is the possibility of the golden path … that we got inflation down without a recession,” he said.
The Fed president said the central bank will be data dependent going forward.

Chicago Federal Reserve President Austan Goolsbee said Tuesday a soft landing is still on the table as the central bank seeks to combat inflation without hurting the economy significantly.
“Because of some of the strangeness of this moment, there is the possibility of the golden path … that we got inflation down without a recession,” Goolsbee said on CNBC’s “Squawk Box.” “If that happened … it would just be a continuation of what we’ve already seen this year, which is unemployment up very modestly, while inflation has come down a lot. … That’s our goal.”

The Fed kept interest rates steady last week, the second consecutive meeting that the Federal Open Market Committee chose to hold, following a string of 11 rate hikes.
Core inflation, per the personal consumption expenditures price index, is currently running at 3.7% on an annual basis, still well above the Fed’s 2% annual target. Goolsbee emphasized that the decline in price pressures so far has already been a great achievement.
“The fastest drop in the inflation rate in any year was 1982,” Goolsbee said. “We’ll see what happens over the next couple of months. We might equal the fastest dropping inflation in the last century. So we’re making progress on the inflation rate.”
The economy has held up well so far amid the tightening measures over the past year and a half. Gross domestic product expanded at a 4.9% annualized rate in the third quarter, stronger than even elevated expectations.
Goolsbee stressed that accomplishing such a “golden path” against a historic surge in inflation won’t be an easy task.

“Unusually for a soft landing of this magnitude, there has never been an inflation rate drop, to get inflation down as much as we’re getting it down without a big recession. That’s basically never happened,” he said. “Let’s shoot to try to manage that.”
The Fed president said the central bank will be data dependent going forward, echoing Chair Jerome Powell’s comments last week.
Powell previously said the central bank hasn’t made any decisions yet for its December meeting, saying that “The committee will always do what it thinks is appropriate at the time.”
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The bank recorded an underlying operating profit before tax of $844 million, well ahead of consensus expectations.
Factoring in $2 billion in expenses related to the integration of fallen rival Credit Suisse, UBS posted a bigger-than-expected third-quarter net loss attributable to shareholders of $785 million.

A logo of Swiss bank UBS is seen in Zurich, Switzerland March 29, 2023. 
Denis Balibouse | Reuters

UBS shares climbed on Tuesday morning after the Swiss banking giant resoundingly beat expectations for underlying profit.
The bank recorded an underlying operating profit before tax of $844 million, well ahead of consensus expectations. UBS shares added 4% in early trade as a result.

Factoring in $2 billion in expenses related to the integration of fallen rival Credit Suisse, UBS posted a bigger-than-expected third-quarter net loss attributable to shareholders of $785 million. Analysts polled by Reuters had anticipated a quarterly net loss of $444 million in a company-compiled poll.
Here are some other highlights:

Total group revenues were $11.7 billion, up 23% from $9.54 billion in the second quarter.
CET1 capital ratio, a measure of bank liquidity, was 14.4%, unchanged from the previous quarter.
Credit Suisse Wealth Management generated positive net new money inflows for the first time since the first quarter of 2022, contributing to inflows of $22 billion for UBS Global Wealth Management.

“You could see that, sequentially, we improved the underlying performance across Wealth Management, Asset Management and our Personal and Corporate banking in Switzerland. They both grew on a quarter-on-quarter basis,” UBS CEO Sergio Ermotti told CNBC on Tuesday.
“The IB [investment bank] has been facing more challenging market conditions, particularly when you look at our business model and the fact that we have been onboarding resources from Credit Suisse. But it was a very solid quarter, and we made very good progress in our integration plans, and at the same time we saw very strong inflows from clients.”
A ‘good set of results’
Analysts at Citi highlighted on Tuesday that the $844 million underlying profit before tax figure was “notably ahead of prior company guidance (of break-even), treble consensus expectations and 6% ahead of our above-consensus forecast.”

“As we expected the beat is driven by better opex [operating expense], 7% below consensus, with revenues also 1% ahead. This is then slightly offset by heavier provisions,” they noted, adding that the acceleration of Wealth Management net new money inflows in September was also “encouraging.”

UBS is also in the process of fully integrating Credit Suisse’s Swiss banking unit — a key profit center — and is expected to cut a hefty proportion of the legacy bank’s workforce.
UBS reported net new deposits of $33 billion across its Global Wealth Management and Personal and Corporate Banking (P&C) divisions, with $22 billion coming from Credit Suisse clients and positive deposit inflows for P&C in September, the month after UBS announced the decision to integrate the domestic bank.
The bank also announced earlier this year that it is targeting gross cost savings of at least $10 billion by 2026, when it hopes to have completed the integration all of Credit Suisse Group’s businesses. More

Most consumers in China are planning to keep a lid on spending during this year’s Singles Day shopping festival, according to a survey from Bain and Company.
Excitement has waned, and nearly half of consumers surveyed this year also said they were turning to cheaper brands or private label products, the Bain study found.
This year, “we expect that there is probably going to be more stocking up of consumables,” James Yang, partner at Bain, said in a phone interview.

Workers at an e-commerce logistics industrial park sort parcels on an express delivery line in Lianyungang, East China’s Jiangsu Province, Nov 5, 2023.
Nurphoto | Nurphoto | Getty Images

BEIJING — Most consumers in China are planning to keep a lid on spending during this year’s Singles Day shopping festival, which ends Nov. 11.
That’s according to a survey of more than 3,000 consumers in the country by Bain and Company, released Tuesday.

Originally launched by Chinese e-commerce giant Alibaba, Singles Day has expanded from a one-day shopping festival into a multi-week period of shopping promotions across different online platforms in China.
Excitement has waned, and nearly half of consumers surveyed this year also said they were turning to cheaper brands or private label products, the Bain study found. Private label products tend to be cheaper than those from comparable big name brands.
For this year’s festival, more than three-fourths of consumers surveyed — or 77% — said they did not plan to increase spending, according to the report.

That’s a touch higher than the 76% reported last year, and up significantly from 49% in 2021, the report said.
Slowing economic growth and worries about future income have weighed on consumer spending over the last few years.

“Look at the broader macroeconomy. The consumer sentiment remains a bit lower than where it was pre-Covid,” James Yang, partner at Bain, said in a phone interview.
“There is more cost [consciousness] among consumers in where and how they want to spend their money.”
This year, “we expect that there is probably going to be more stocking up of consumables,” Yang said.

Keeping quiet on total numbers

Last year, both Alibaba and online retail giant JD.com for the first time declined to disclose Singles Day gross merchandise value, an industry measure of sales over time.
Bain estimates that including other platforms, Singles Day e-commerce GMV rose by 3% to 934 billion yuan ($128.25 billion) in 2022.

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When factoring in another 181 billion yuan in livestreaming and content-led e-commerce, the total GMV for last year’s festival topped 1 trillion yuan ($140 billion), the report said.
For context, those China market figures are still multiples larger than the $35.3 billion that Adobe Analytics said U.S. consumers spent online in 2022 for the local equivalent: the week of Thanksgiving, Black Friday and Cyber Monday.
Livestreaming and posting videos or photos on social media as a way to sell products has taken off in China. Alibaba and JD.com both offer livestreaming functions. Douyin, the Chinese version of TikTok, has become a major platform for people and retailers selling to consumers via livestreams.
“The expectation is that the livestreaming share is going to continue to increase,” Bain’s Yang said.
He added that different kinds of consumers are also spending differently. Those with higher incomes are generally still spending, while the blue-collar segment of the population are cutting back, he said.
“Middle class, they fluctuate in between,” he said. “People are more cautious in how they trade off, what they want to buy.” More

The cost of important health insurance components, like deductibles and out-of-pocket maximums, has risen at a more muted pace in recent years.
For example, the average deductible has grown by 10.3% in the past five years. That’s down significantly from 38.6% growth during the 2013-2018 period, and 54.4% from 2008 to 2013, according to data from KFF, a nonprofit health-care data provider.
Workers can potentially save money by ensuring they’re picking the best plan for their circumstances.

Morsa Images | Digitalvision | Getty Images

Costs for some key health insurance components have slowed for workers in recent years. While the deceleration is a positive trend, many workers likely still find current prices unaffordable, experts said.
“Yes, it’s slowed,” said Carolyn McClanahan, a physician and certified financial planner, and founder of Life Planning Partners in Jacksonville, Florida. “But it’s already egregious for the average person.”

Employer-sponsored health plans have many moving parts that can affect workers’ wallets. For example, workers get premiums deducted from each paycheck. Visiting the doctor generally comes with cost-sharing, like co-payments, deductibles and out-of-pocket maximums.
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The rise in worker premiums has somewhat mitigated.
Workers pay $1,401 in total premiums in 2023, up 18% from 2018, according to KFF, a nonprofit health-care data provider. They increased by an equivalent amount from 2013 to 2018, but had swelled by 39% from 2008 to 2013.
The dynamic is more pronounced for deductibles and out-of-pocket maximums.

A deductible is the annual sum a consumer must pay out of pocket before a health insurer starts to pay for services.

Single workers have a $1,735 average deductible in 2023, according to KFF. (This cost is for employer-sponsored health plans and assumes consumers receive in-network care.)
The average deductible has grown by 10.3% in the past five years, up from $1,573 in 2018. However, that rate has slowed significantly relative to the recent past: Deductibles rose by 38.6% from 2013 to 2018, and by 54.4% from 2008 to 2013, for example, according to KFF data.
Prior to 2018, deductibles “were taking off,” said Matthew Rae, associate director of KFF’s health-care marketplace program and co-author of its annual health benefits survey.  

How out-of-pocket maximums have changed

The dynamic is similar for out-of-pocket maximums, the annual limit on a worker’s cost-sharing for the year. After hitting this limit, insurers can’t ask for more co-pays, co-insurance or deductibles, for example.
The out-of-pocket maximum is “what really matters for people who spend a lot” on health care, Rae said.
In 2023, 13% of single workers have an out-of-pocket maximum of less than $2,000, while 21% of these workers have one above $6,000, KFF said. That’s hardly changed in the past five years.

It’s already egregious for the average person.

Carolyn McClanahan
founder of Life Planning Partners

However, the dynamic changed a lot during the prior five-year period. In 2013, 29% of workers had an out-of-pocket maximum below $2,000, while only 4% had one of $6,000 or more, according to KFF. In other words, the share of people with a relatively low limit was halved from 2013 to 2018, and the share with a high limit jumped fivefold.
After years of both the maximum and deductibles increasing rapidly, “that’s not the story anymore,” Rae said.

Strong labor market is a big factor

Solskin | Digitalvision | Getty Images

A reduction in the growth of worker cost-sharing requirements is largely attributable to a strong labor market in recent years, Rae said. That has led employers to make their health plans more competitive to attract and retain staff. But it’s unclear how long that strength will last; indeed, it’s been cooling in recent months.
However, consumers shouldn’t necessarily “throw up [their] hands and celebrate,” Rae added. Families with multiple dependents trying to meet an annual deductible may be enough to put middle class households in debt, he said.
One in four employers report being highly concerned about the affordability of cost-sharing within their health plans, according to KFF.
And while cost-sharing costs may have slowed, insurers may be tweaking certain aspects of health plans that make them relatively less valuable to consumers — by narrowing a plan’s roster of in-network providers, for example, said McClanahan, a member of CNBC’s Advisor Council.

How to keep costs down

Choosing the most cost-effective health plan for you generally comes down to picking “only the plan you need,” McClanahan said.
In other words, a plan with comprehensive coverage but high monthly premiums may not be the best choice for someone who doesn’t get frequent medical care.

For example, an HMO plan will generally be best for consumers who don’t have significant health problems and rarely go to the doctor, she said. Find a good primary care doctor and ask what network the doctor is on for HMOs so you can get the doctor you want, she recommended.
Of course, most employees only get a few choices during open-enrollment season, so there’s not much they can do on an individual level, McClanahan said. At the family level, however, there may be other variables: If both spouses work, the most efficient option may be electing one plan for the whole family, or putting a spouse and kids on one plan and the remaining spouse on the other, she said. More

Buy now, pay later firm Klarna has begun a legal entity restructuring to set up a new holding company in the U.K., as a precursor to an eventual IPO.
Klarna has no immediate plans to go public, a spokesperson said, and setting up its new legal entity in the U.K. does not necessarily mean that the company will list there.
The company last raised cash at a valuation of $6.7 billion, which marked a massive 85% haircut to its previous valuation of nearly $46 billion.

“Buy-now, pay-later” firm Klarna aims to return to profit by summer 2023.
Jakub Porzycki | NurPhoto | Getty Images

Buy now, pay later firm Klarna has established a holding company in the U.K. that will sit at the top of its corporate structure, in a symbolic move that paves the path for an eventual listing.
A Klarna spokesperson confirmed to CNBC that the Stockholm-based business, which lets shoppers defer payments over a period of installments, has begun a legal entity restructuring to set up the holding company.

Preparations for the new company have been agreed with some of Klarna’s largest shareholders, including Sequoia and Heartland, the spokesperson said.
The Klarna spokesperson said the move was a precursor to a formal listing, but added these are still “very early days,” and the company has no immediate-term plans to go public.
Klarna also hasn’t decided on where it would opt to list, the spokesperson said, and setting up its new legal entity in the U.K. does not necessarily mean that the company will go public there.
It does, however, give Klarna flexibility over which stock exchange it decides on.
The restructuring “is an administrative change that has been in the works for over 12 months and does not affect anyone’s roles, nor Klarna’s Swedish operations,” the Klarna spokesperson told CNBC via email.

“Klarna Holding will continue to be the regulated financial holding company under the direct supervision of the SFSA [Swedish Financial Services Authority] and we will continue to hold a Swedish banking license.”
Klarna is a big player in the European payments industry, worth $6.7 billion.
Like PayPal and Stripe, it allows merchants to add checkout functionality to their online stores. It differs from these competitors in its flexible payment plans, known as buy now, pay later.
At the height of the Covid-driven boom in e-commerce, Klarna was worth a whopping $46 billion, onboarding SoftBank as an investor. Its valuation was slashed by 85%, to $6.7 billion after the pandemic-fueled boom in technology valuations deflated.
Klarna, which was included in CNBC and Statista’s list of the top 200 fintech companies, has raised more than $4 billion in funding to date from investors including Sequoia, Silver Lake and China’s Ant Group.
The U.K. was originally set to enforce tough new regulations on the buy now, pay later industry, with plans to require affordability checks and clearer communication in the advertisement of such services.
Britain has reportedly been considering shelving those plans after a number of the biggest players said, in talks with the government, that they may be forced to leave the U.K. if they are subjected to “heavy-handed” regulation.
Bosses at Klarna and Block, which owns buy now, pay later service Clearpay, had lashed out at certain aspects of the U.K.’s regulation plans, including a measure which would have exempted e-commerce giant Amazon from being subjected to the rules.
Klarna has since been pushing aggressively toward profitability, reporting its first month of profit earlier this year for the first time since 2020.
Klarna has been investing heavily in artificial intelligence products, most recently launching an AI image recognition tool that can identify certain products, like a jacket or a pair of headphones.
Separately this weekend, Klarna also reached a deal with workers in Sweden to put an end to plans to go on strike.
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During the quarter, DBS net profit rose to 2.63 billion Singaporean dollars ($1.94 billion) compared to SG$2.24 billion a year ago.
The Singapore bank also declared a dividend of 48 Singapore cents for each ordinary share for the third quarter.
“We achieved record income in the third quarter as net interest margin continued to expand and growth in commercial book non-interest income was sustained,” said Piyush Gupta, chief executive officer of DBS.

DBS branch in Hong Kong.
Budrul Chukrut | SOPA Images, LightRocket | Getty Images

Southeast Asia’s largest lender DBS Group reported a 17% jump in third-quarter profit on Monday, benefiting from a high-interest rate environment.
During the quarter, net profit rose to 2.63 billion Singaporean dollars ($1.94 billion) compared to SG$2.24 billion a year ago.

It was higher that analysts’ estimates compiled by LSEG, which predicted a quarterly profit estimate of SG$2.5 billion for the July to September quarter.
The Singapore bank also declared a dividend of 48 Singapore cents for each ordinary share for the third quarter.

Stock chart icon

Shares of the company rose 0.75%.
Net interest margin, a measure of lending profitability, was at 2.19% in the third quarter, higher than 1.90% during the same period a year ago.
“We achieved record income in the third quarter as net interest margin continued to expand and growth in commercial book non-interest income was sustained,” said Piyush Gupta, chief executive officer of DBS.

“As we enter the coming year, higher-for-longer interest rates will be a net benefit to earnings, while our solid balance sheet with ample liquidity, prudent general allowance reserves and healthy capital ratios will provide us with strong buffers against macro uncertainties,” Gupta added.
DBS, Singapore’s largest bank, was second to report among the country’s top lenders.
Smaller rival United Overseas Bank posted a 1% drop in third-quarter net profit in October, missing analysts’ expectations.
Oversea-Chinese Banking Corporation is set to report quarterly results on Nov. 10. More