UBS second-quarter earnings 2024

General view of the UBS building in Manhattan, New York City, on June 5, 2023.

Eduardo Munoz Alvarez | View Press | Corbis News | Getty Images

Swiss banking giant UBS on Wednesday smashed net profit expectations for the second quarter, amid cost-cutting steps and swelling revenue at the lender’s global wealth management and investment bank units.

Net profit attributable to shareholders came in at $1.136 billion for the period, versus a company-compiled consensus forecast of $528 million.

Profit was nonetheless lower than the $1.755 reported in the first quarter, as expected by analysts.

Group revenue also beat forecasts in the second quarter, coming in at $11.904 billion versus an LSEG-compiled poll of $11.522 billion.

UBS said strong capital markets activity had partially offset a drag from net interest income, which it had previously flagged would be weaker due to lower lending and deposit volumes and lower Swiss interest rates.

In the bank’s global wealth management unit, revenue increased by 15% to $6.053 billion, which UBS said was largely due to the consolidation of Credit Suisse. Revenue in the investment bank unit leapt 38% to $2.803 billion.

“Across the board we showed pretty good resilience, in investment banking, in wealth management, but also I think that we are making good progress in de-risking in our core and taking down cost there,” UBS CEO Sergio Ermotti told CNBC’s Silvia Amaro in a Wednesday interview.

On the profit beat, Ermotti said: “It’s a combination of good momentum on the top-line, but also good progress on cost reductions.”

He added that the bank was seeing good momentum from client activity and transaction volumes in wealth management, though some headwinds on its margins from lower net interest income.

It has now been over a year since UBS formally took over Credit Suisse, triggering a huge integration process and creating a wealth management juggernaut. UBS said at the start of July the merger process had completed and that Credit Suisse — the Swiss bank which spectacularly collapsed in March 2023 after years of financial scandals — no longer existed as a separate entity.

Shedding risk-weighted assets — a major part of Credit Suisse’s business — has been a key part of that process.

UBS said it now expects to end 2024 with cumulative gross savings from the Credit Suisse deal of $7 billion, out of a target of $13 billion by 2026 compared with a 2022 baseline. It had previously aimed to deliver $6.5 billion in savings by the end of the year.

The bank had swung back to profit in the first quarter 2024 after two quarterly losses related to the cost of the integration.

“What’s next is a few years of work. We are still far away from the profitability UBS had before being asked to step in and rescue Credit Suisse,” Ermotti told CNBC, adding that the bank’s task now includes a focus on the U.S. and Asia-Pacific region, Ermotti told CNBC.

In a note covering Wednesday’s results, analysts at Royal Bank of Canada said: “UBS is delivering faster on the factors it can control – cost savings and [non-conforming loan] run down – which should provide some buffer against regulatory headwinds and a potentially more challenging operating environment.”

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