UBS Reports $1.8 Billion Profit in Q1

UBS Group AG has returned to profitability after two consecutive quarters of losses, reporting a net income of $1.8 billion for the first quarter of the year. This result was nearly three times higher than analysts’ expectations, highlighting the significant progress in the integration of Credit Suisse following its emergency rescue in 2023.

The Zurich-based bank’s strong performance was driven by a combination of factors, including wealth management, investment banking, and accounting benefits related to the Credit Suisse acquisition. The announcement led to a surge in UBS’s share price, which jumped 9% by 11:40 a.m. in Zurich, marking the largest increase since the Credit Suisse deal.

The positive results offer some relief to UBS Chief Executive Officer Sergio Ermotti, who has been under pressure due to new regulatory requirements imposed by the Swiss government. The bank is expected to maintain up to $20 billion in additional capital. Despite these regulatory challenges, Ermotti assured investors that UBS remains committed to capital returns and is targeting $2 billion in share buybacks over the next two years.

“We also see good momentum with clients, with inflows across our businesses, and our capital is strong, allowing us to continue to pursue our capital return plans,” Ermotti said in an interview with Bloomberg Television.

UBS has set a target to complete the legal merger with Credit Suisse by May 31. According to Ermotti, the focus will soon shift to migrating Credit Suisse clients onto UBS platforms as the process of winding down unwanted Credit Suisse assets continues. In the first quarter, UBS realised about $1 billion in cost savings and aims for an additional $1.5 billion by the end of 2024.

The wealth management unit delivered strong results, with revenue reaching $6.1 billion, up from $5.6 billion at the end of December. The growth was driven by performance in the Americas, Switzerland, and the Asia-Pacific region.

UBS’s investment banking division also exceeded expectations, reporting a before-tax profit of $555 million, compared to analyst estimates of $398 million. The bank’s advisory, debt, and equity capital markets services saw a 52% increase in revenue from a year earlier, with particularly strong performance in the Americas.

The gains from the Credit Suisse acquisition played a significant role in the results, but the bank also warned that the changing central-bank rate environment could impact earnings from lending. UBS expects net interest income to decline in wealth management and personal and corporate banking in the coming quarters.

Overall, UBS’s latest financial results demonstrate that the bank is making headway in integrating Credit Suisse and stabilising its business operations. As UBS continues its journey, the focus will remain on managing regulatory requirements while pursuing growth opportunities across various business units.

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