Swiss banking giant UBS exceeded net profit expectations for the second quarter, reporting a net profit attributable to shareholders of $1.136 billion, significantly higher than the expected $528 million. Despite this, the profit was lower than the previous quarter’s $1.755 billion. Revenue for the quarter also surpassed forecasts, reaching $11.904 billion compared to an expected $11.522 billion. UBS attributed the strong performance to increased revenue in its global wealth management and investment bank units, partially offset by lower net interest income.
The bank reported a 15% increase in revenue in its global wealth management unit, totaling $6.053 billion, largely due to the consolidation of Credit Suisse. Revenue in the investment bank unit surged 38% to $2.803 billion. UBS highlighted the impact of strong capital markets activity in offsetting the decline in net interest income, which was affected by lower lending and deposit volumes as well as lower Swiss interest rates. Looking ahead, UBS acknowledged ongoing global uncertainties such as geopolitical tensions and the upcoming US elections, which may lead to higher market volatility compared to the first half of the year.
UBS had returned to profit in the first quarter after incurring losses in the previous two quarters, but warned of anticipated decreases in net interest income in the global wealth management and personal and corporate banking divisions. The bank completed the merger with Credit Suisse over a year ago, resulting in significant integration efforts to create a leading wealth management entity. UBS announced that Credit Suisse, which experienced a spectacular collapse in 2023 after financial scandals, no longer exists as a separate entity. The bank is now focusing on achieving gross savings of $7 billion by the end of 2024, out of a target of $13 billion by 2026, with $6.5 billion in savings expected by the end of this year.
As part of the merger process, UBS has cut jobs and risk-weighted assets to streamline operations and enhance efficiency. The bank’s updated target is now $7 billion in cost savings by the end of 2024, exceeding the previous goal of $6.5 billion over the period. UBS continues to navigate the challenging macroeconomic environment characterized by uncertainties and market volatility, emphasizing the need for resilience and adaptability in the face of ongoing conflicts and geopolitical tensions. The bank’s solid performance in the second quarter reflects its ability to capitalize on opportunities in capital markets while strategically managing risks and costs to drive sustainable growth and value for shareholders.
