UBS has reported its first quarterly profit since acquiring Credit Suisse, with a net profit of $1.8 billion for the first three months of 2024. This marks a significant improvement from the losses incurred in the previous six months following the completion of the rescue deal. CEO Sergio Ermotti attributed this success to the strength of the bank and its ability to make significant progress on integration plans. Analysts noted that the results were much stronger than expected, with revenue increasing by 45% from a year ago and net new money of $27 billion flowing into the global wealth management business.
The bank has pledged to slash costs by $13 billion by the end of 2026, including significant job cuts, in order to ensure the success of the merger. The acquisition of Credit Suisse was completed in June of last year as a government-led rescue effort to prevent a global financial crisis. The integration process is expected to take at least another two years, with Ermotti emphasizing that this year will be pivotal for the combination of operations across more than 50 countries. UBS is on track to achieve significant integration milestones, such as merging operations in Switzerland in the third quarter.
Shares in UBS have risen by more than 54% in the past year but faced a recent selloff after Switzerland’s finance ministry proposed increased capital requirements for the bank. These requirements could potentially amount to 25 billion Swiss francs, leading UBS to question the necessity of such regulations. Ermotti reiterated the bank’s position that it was not a lack of capital that led to the need for Credit Suisse’s rescue. UBS has already added nearly $20 billion to its capital buffers as a result of the acquisition, due to increased market share and balance sheet size.
UBS has focused on achieving cost savings and increasing revenue, resulting in a 71% increase in net profit from a year ago. The bank is committed to its cost-cutting targets of $13 billion by 2026, which includes job reductions. The successful integration of Credit Suisse is a key priority for UBS, with significant milestones expected to be met this year. Ermotti is optimistic about the progress made so far and is hopeful for a proportionate outcome in discussions with regulators regarding capital requirements.
Overall, UBS has shown a strong financial performance in the first quarter of 2024, with revenue growth, cost savings, and net new money inflows contributing to the bank’s profitability. The successful merger with Credit Suisse has been a major factor in UBS’s turnaround, with the bank on track to achieve key integration milestones. Despite concerns over increased capital requirements, UBS remains confident in its financial position and is actively engaging with regulators to advocate for a fair and transparent assessment of the situation.
