UBS has reported its first quarterly profit since acquiring Credit Suisse, posting a net profit of $1.8 billion for the first quarter of 2024, a significant increase from the previous year. The Swiss lender saw its shares surge by 10% following the announcement, marking a sharp turnaround from six months of losses after completing the rescue deal. CEO Sergio Ermotti highlighted the bank’s ability to deliver progress on its integration plans and noted that the results exceeded expectations. Revenue increased by 45% to $12.7 billion, with UBS attracting $27 billion in net new money to its global wealth management business.
The bank announced plans to cut costs by $13 billion by 2026, including thousands of job cuts, in order to ensure the success of the Credit Suisse merger. The acquisition was orchestrated by the government in an effort to prevent a global financial crisis, with the integration process expected to take another two years. Ermotti, who was brought back as CEO for a second stint, has emphasized the pivotal nature of this year for the combination of the two banks, involving operations in over 50 countries. UBS is on track to achieve significant integration milestones, including the merger of operations in Switzerland in the third quarter.
Despite a 54% increase in UBS’s shares over the past year, a recent selloff occurred after Switzerland’s finance ministry proposed higher capital requirements for the bank. Swiss finance minister Karin Keller-Suter suggested that UBS may need to hold an additional 25 billion Swiss francs in cash and liquid assets to absorb potential losses. Ermotti expressed concern about the proposals, stating that Credit Suisse’s failure did not stem from a lack of capital. UBS has already added nearly $20 billion to its capital buffers due to the Credit Suisse takeover, with plans to engage with relevant authorities for a balanced outcome.
UBS’s successful quarter was driven by strong revenue growth as well as cost savings of $1 billion, adding to the $4 billion cut last year. The bank is focused on achieving its integration goals and maximizing the benefits of the Credit Suisse merger. Analysts have praised UBS’s performance, highlighting its ability to attract new capital and deliver on its financial targets. The bank’s progress in cost reductions and revenue growth demonstrates its resilience in a challenging financial environment. Despite regulatory challenges, UBS remains optimistic about its future prospects and is committed to working with authorities to address concerns.