ZURICH – UBS booked net income for January to March that was nearly triple estimates as it logged its first quarterly profit since taking over fallen rival Credit Suisse.
The group’s wealth management arm also on May 7 reported US$27 billion (S$36.52 billion) in net new assets for the first quarter of the year, compared with US$22 billion for the three months prior.
UBS, however, flagged that lower lending and deposit volumes as well as lower interest rates in Switzerland could impact the bank’s wealth management division.
“In the second quarter of 2024, we expect a low-to-mid single-digit decline in net interest income in global wealth management,” the bank said in a statement.
Net income attributable to shareholders for Switzerland’s largest bank came in at US$1.8 billion, better than a company-provided consensus estimate of US$602 million and a profit of US$1 billion in the same period a year earlier.
“UBS reported a massive beat for 1Q24 on higher revenues... and lower costs,” Vontobel analysts said.
They noted the main boost had come from “non-core” businesses inherited from Credit Suisse that UBS plans to exit, but all operating divisions reported solid results.
UBS also said that it achieved an additional US$1 billion in gross cost savings in the first quarter, taking total savings since the merger to US$5 billion. It is aiming to achieve another US$1.5 billion in savings by the end of the year.
The first merger of two global systemically important banks – orchestrated by the Swiss authorities who feared that scandal-ridden Credit Suisse was on the brink of collapse – was completed in June 2023, after which UBS posted two consecutive quarters of losses due to the costs of absorbing its rival.
Despite the shotgun nature of the takeover, investors have been upbeat about UBS’s prospects given the low acquisition costs and its huge increase in assets. Shares in the bank have climbed some 40 per cent over the past year.
2024 is expected to be a pivotal year for UBS as it tackles some of the trickier stages of integration such as combining separate IT systems and legal entities, as well as migrating clients from Credit Suisse to UBS.
With the merger, UBS’s balance sheet has expanded to more than US$1.6 trillion, nearly twice the size of Switzerland’s economy and worrying regulators who fear huge consequences should the bank run into trouble.
Switzerland’s government recently laid out plans for how to police banks deemed “too big to fail” and tougher capital rules are expected sometime in the next few years.
UBS said its current financials will allow it to execute on its 2024 capital return targets. This includes a plan to repurchase up to US$1 billion in shares in 2024 as well as increase 2023’s dividend of 70 US cents per share by a mid-teen percentage in 2024. REUTERS
