UBS reports first profit since Credit Suisse takeover

7th May 2024 10:32

(Sharecast News) - Swiss banking giant UBS announced its first quarterly profit since its takeover of Credit Suisse on Tuesday, sending its shares northward.

The bank reported a net profit of $1.8bn for the first quarter of the year, significantly surpassing analysts' expectations of $602m, and swinging from a loss of $279m in the prior quarter.

A key driver of the performance was UBS's wealth management business, which attracted $27bn in net new assets as clients returned to the bank amidst the turmoil triggered by the acquisition.

Revenues surged 15% to $12.7bn, while expenses were trimmed by 5.5%, as UBS achieved an additional $1bn in cost savings during the quarter, bringing its total cost reduction to $5bn in the last year.

The bank said it aimed to further cut costs by $13bn by 2026, with an additional $1.5bn in savings expected this year.

UBS reported common equity tier one (CET1) capital of $78bn, with a CET1 ratio of 14.8%.

The bank affirmed its commitment to meeting its 2024 capital return targets, and also announced plans to repurchase $2bn of shares from investors.

"A little over a year ago, we were asked to play a critical role in stabilising the Swiss and global financial systems through the acquisition of Credit Suisse, and we are delivering on our commitments," said group chief executive officer Sergio Ermotti.

"This quarter marks the return to reported net profits and further capital accretion - a testament to the strength of our business and client franchises and our ability to deliver significant progress on our integration plans while actively optimising our financial resources."

In terms of business segments, UBS said its wealth management division saw revenue of $6.1bn, an 11% increase from the prior quarter, while its investment bank generated $2.8bn in revenue, marking a 16% rise from the fourth quarter of 2023.

Following completion of the Credit Suisse takeover last June, UBS executives cautioned investors about the challenging integration process, which they expected would be both arduous and protracted.

At 1124 CEST (1024 BST), shares in UBS Group were up 8.35% in Zurich at CHF 26.98.

Reporting by Josh White for Sharecast.com.