UBS pleases market with gains after CS takeover
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The news: UBS pleased Wall Street with the best second-quarter performance from its global markets unit since 2013 and cost savings from its Credit Suisse acquisition.
The numbers: The bank posted net profit of USD1.1 billion ($1.67 billion) for Q2 2023, down on last year's USD27.3 billion boon from the CS deal, but almost double analysts' forecasts of USD528 million.
The beat sent shares as much as 6% higher in New York to USD31.03 each, outperforming the European banking sector.
Switzerland's largest bank said it made progress in reducing non-core assets, achieving USD0.9 billion in additional savings and lowering risk-weighted assets by 42% since Q2 2022. It had agreed to sell Credit Suisse’s US mortgage-servicing unit to an unnamed buying consortium, the company said.
The context: A year after acquiring Credit Suisse, UBS has exceeded expectations by swiftly cutting assets, staff and costs, leading to stronger-than-forecast profits in 2024.
In the second quarter, the investment banking division made up for its flagship Global Wealth Management unit’s underperformance, which was primarily driven by higher-than-expected compensation costs for advisers. Weaker than expected net interest income also weighed on the bottom line.
What they said: In a statement, CEO Sergio Ermotti said the results demonstrated “significant progress” made since buying Credit Suisse in early 2023, which puts the bank on track to regain profitability at pre-acquisition levels.
“We are now entering the next phase of our integration, which will be critical to realise further substantial cost, capital, funding and tax benefits," he said. The bank flagged around USD1.1 billion in integration-related expenses for Q3 2023. Ermotti said the bank remained cautious in an environment clouded by geopolitical tensions, the US election and market volatility.
The sources: UBS statement , Bloomberg
